MODERN  BANKING 
METHODS 


TELLERS  AND  BOOKKEEPERS 


BY 

GEORGE  O.  BORDWELL 

Chief  Clerk  of 
The  First  National  Bank 
of  S«n  Francisco 


Published  by 

THE  HICKS-JUDD  COMPANY 
51-65  First  Street,  San  Francisco 


COPYRIGHT 
BY 

GEORGE  O.  BORDWELL 

1913 


DEDICATED 
TO  THE  OFFICERS 

OF 
THE  FIRST  NATIONAL  BANK  OF  SAN  FRANCISCO 

whose  liberal  policy  has  encouraged  the  study  and  in- 
vestigation of  bank  methods  and  the  develop- 
ment of   an  efficient  and  elastic 
system  for  the  handling  of 
bank  business. 


1 409 


PREFACE 

The  majority  of  inquiries  as  to  banking  methods  refer  to 
the  bookkeeping  system.  The  success  of  any  bookkeeping 
system  depends  upon  the  promptness  and  frequency  with 
which  the  checks  and  deposit  tags  are  received  by  the  book- 
keepers, also  upon  the  early  development  each  day  of  accu- 
rate figures  with  which  each  bookkeeper  shall  balance. 

Any  description  of  the  bookkeeping  system  must  there- 
fore include  the  work  of  the  tellers.  It  is  often  more  neces- 
sary to  improve  the  tellers'  methods  and  their  blotter  system 
than  to  make  any  alteration  in  the  bookkeeping  system.  Both 
are  frequently  necessary.  Loose-leaf  blotters  for  the  tellers 
and  loose-leaf  ledgers  for  the  bookkeepers  are  rapidly  replac- 
ing bound  books. 

The  following  pages,  devoted  to  modern  banking  methods 
as  applied  to  the  tellers  and  bookkeepers,  show  the  operation 
of  these  loose-leaf  records  and  are  offered  as  a  partial  record 
of  today's  progress  in  banking  methods,  in  the  hope  that  they 
will  prove  of  value  here  and  there  among  banks  whose  meth- 
ods have  not  reached  their  highest  efficiency. 


CONTENTS 

Page 
INTRODUCTION 

Records    Co-Related xiii 

Records  Essential  to  This  System xiv 

Check    Divisions         ---------      xv 

Items   Readily  Trztced     --------    xvi 

CHAPTER  I.         THE    INTERIOR   PROVING   DEPARTMENT 

Details   of   System   Vary   with    Size   of   Bank     -      -  1 

Record  and  Proof  of  Deposits      ------  2 

Daily   Check  Proof    in    Small    Banks      -      -      -      -  2 

Interior     Proving     Department     Needed     in     Larger 

Banks 3 

Interior  Proving  Department's   Proof  Sheets  4 

Missorts   and   Reclamations 5 

Interior  Proving  Department's  Recapitulation  Sheets  6 

CHAPTER  II.    THE  BOOKKEEPERS 

Bookkeeping    Records 8 

Balances    Compared     ---------9 

Proof    of    Ledgers 9 

Inactive     Accounts 10 

Accounts   of    Banks     ---------10 

Bank  Balance  Sheet 11 

Check-List  a  Short-Cut 11 

Advantages       -----------12 

Variations  in  Smaller  Banks    -------13 

CHAPTER  III.   TELLERS'  BLOTTERS:  OLD  METHODS 

INCOMPLETE 14 

CHAPTER  IV.   THE  VAULT  TELLER      -   -   -   -  18 

CHAPTER  V.    THE  CLEARING  HOUSE  TELLER 

Clearing  House  Teller -    20 

Out-Clearing     Department 21 

City    Cash    Collections 21 

Reclamations       ----        ...--        -22 


viii  Modern  Banking  Methods 

Page 

CHAPTER  V.    THE  CLEARING  HOUSE  TELLER— Continued 

Errors  Between  Clearing  Banks    ------     24 

In-Clearing      Adjustments        ______      -24 

Out-Clearing    Adjustments      -------    26 

Clearing  House  Teller's  Blotter    - 27 

CHAPTER  VI.        TELLERS'    BLOTTERS:     MODERN 
METHODS 

Tellers'    Recapitulations     -      -             -      -      -      -       -  28 

Form  of  Blotter     ----------28 

Summary   of   All   Tellers'    Blotters      -----  28 

No  Coin  or  Currency  between  Tellers                          -  29 

Variations  in  Smaller  Banks     -------  29 

CHAPTER  VII.   THE  PAYING  TELLERS 

Paying    Tellers'    Duties      --------30 

Their  Coin  from  Vault     - --30 

Currency  for  Paying    ---------30 

Checks   Paid     -      - 

Coin  and  Currency  to  Vault  -- 32 

Paying  Teller's    Blotter     --------32 

Certified  Checks     ----------33 

CHAPTER  VIII.    THE  RECEIVING  TELLERS 

Old  Methods  Mean  Loss  of  Time     -----    35 
New     Methods  ___-__---     35 

Tellers  Separate     ----------36 

Name   of   Depositor     _--- 36 

Coin    and    Currency    Deposited  -    36 

Checks     Deposited       ---------36 

Receiving    Tellers'    Assistants        ------     38 

Deposits    Held    Out     ---------     38 

The     Write-Up      -  _____     39 

Assorting    ------------     39 

Receiving    Teller's    Blotter  -      -    39 

Listing         ___---------     40 

Missorts      ------------    41 

Large  Deposits       ----------    42 

Coin  and  Currency  to  Vault    -------43 

CHAPTER  IX.        ADDING   MACHINE   RULES   -  44 

CHAPTER  X.          THE  IN-MAIL  TELLERS 

Transfers   of   Funds     -  45 

Collecting  the   Draft  or   Check     -----  45 

Transit  Department     --------  46 

In-Mail   Teller       --------  -  46 

Incoming     Letters       ---------  46 


Contents  ix 

Page 
CHAPTER  X.          THE    IN-MAIL   TELLERS— Continued 

No    In-Mail    Coin        ---------    47 

In-Mail  City  Cash  Collections     -  -      -    47 

Messengers'  Records    ---------47 

Credit  Advices     - 49 

Deposit     Lists       __-- -49 

Use    of    Carbon      ----------     SO 

Cash     Letters     From     Exchange     Banks     and    "For 

Remittance"      --  __._---     50 

In-Mail  Teller's   Blotter  ...    51 

CHAPTER  XL         EXCHANGE 

Transfers  Through  In-Mail  and  Transit  Departments     53 
Exchange    ------------54 

Exchange   Costs 

Exchange    Statistics     ---------57 

Exchange   Work  of  Transit,   In-Mail   and   Exchange 

Departments     ----------57 

Cash  Letters  from  Exchange  Banks    -----     59 

CHAPTER  XII.   THE  EXCHANGE  TELLER 

Exchange  Teller's  Duties  -  60 

Bank   Drafts     -      -      - 61 

Drafts    on    Foreign    Banks      -      -      -      -      -      ---62 

Draft   Register  or   Credit   Register     -      -      -  -     63 

Foreign  Debit   Register     --------63 

Foreign   Bills   of   Exchange    Purchased  -    65 

Foreign    Accounts:       Bookkeeping     -----    65 

Minor    Debits    and    Credits      -------67 

Travelers'  Letters  of  Credit    - 68 

Drafts   with  Documents     --------70 

Commercial    Letters   of   Credit     - 70 

Telegraphic    Transfers       --------71 

Exchange    Teller's    Blotter     - -     73 

CHAPTER  XIII.    THE  COLLECTION  TELLER 
Collection    Teller's    Duties 
Drafts  with  Documents     --------75 

Other  Drafts     ---------  76 

Checks    for    Collection     --------77 

Outgoing    Collections:       Records      -      -      -      -        -     77 

Out-Collections  Register    --------78 

In-Coming    Out-of-Town    Collections  -     80 

Returns  for  Outgoing    Collections      -----    80 

City    Cash    Collections      --------81 

Incoming  Collections  ---------81 

Incoming  Notes  for  Collection     ------     81 


x  Modern  Banking  Methods 

Page 
CHAPTER  XIII.     THE   COLLECTION  TELLER— Continued 

In-Collections    Register      --------82 

Bill    of    Lading    Drafts       -      -      - 83 

Other     Collections -83 

Collections  Outstanding  Only  a  Few  Days  -    85 

Collection  Desk  Drafts     --- -86 

Note    Desk    Collections     --------86 

Collection    Desk    Exchange     -------87 

Collection    Teller's    Blotter     -------88 

CHAPTER  XIV.     THE  NOTE  TELLER 

Notes  and  Discounts    ---------89 

Discount  Blotter    ----------90 

Loose  Leaf  Records    -- 91 

Note  Teller's  Blotter    ---------    92 

Note  Ledger    -----------    93 

Securities    ------------93 

Coupon    Tickler     ----------94 

CHAPTER  XV.   THE  GENERAL  BOOKS 

Character  of  General  Ledger    Entries  -    95 

Departments'  Totals  Verified  to  Tellers'  Totals    -     -     95 
Bookkeepers'  Reports  of  Daily  Totals     -      -      -      -    97 

Short    and    Over  Book     --------98 

Daily  Reports  to  Officers    --------99 

Methods  for  General  Books    -------    99 

APPENDIX.  GENERAL   INSTRUCTIONS  TO   BOOK- 

KEEPERS 

The  Day's  Work    ----------  101 

Desk  Arrangements     ---------  101 

Checks  and  Deposits  Originate     ------  101 

The   Ledgers:       Alterations     -------  102 

The  Ledgers:       Army  Accounts    ------  102 

Tne    Ledgers:       Checks    in    Detail      -----  102 

Transferred    Ledger    Pages      -------  104 

Records  Temporarily  Taken  Away     -----  104 

Proof  of  Ledgers    ----------  104 

Adding     Machines       ---------  105 

Inactive     Accounts       ---------  105 

Checks         ------- 106 

Overdrafts         __--------_  107 

Signatures         -----------  107 

Letter  of  Credit  Drafts     --------  107 

Amounts    to    Agree      ---------  107 

Date   of   Checks     ----------  107 


Contents  xi 

Page 

APPENDIX.  GENERAL    INSTRUCTIONS    TO    BOOK- 

KEEPERS—Continued 

Stop-Payment  -      -      -      -  107 

Duplicate      Checks       _--- 108 

Checks  on  Other  Banks     - 108 

Endorsements         ----------  108 

Cash   to   Employees     -      -      - 109 

Office  Debits    -----------  109 

Checks  Rejected -----  109 

Cancellation    of    Checks     --------  HO 

Responsibility         ._-_--_--_  HO 
Duplicate  Checks    ----------  110 

Checks    to    Be    "Protected"    and    Dummy    Certified 

Check  Debits  ----- 110 

A.  M.  Deposits  ...      -        _  m 

Deposit  to  Own  Credit  to  Be  Questioned     -  111 

Date    Deposit    Tags Ill 

Depositor's  Name  ----------  111 

Check  Proof     -      -      -      - -      -  111 

Deposit     Proof       -  --------111 

Daily  Reports  -----------112 

Inquiries    from    Tellers     --------  113 

Telephone   Inquiries     ---------  113 

Unprofitable     Accounts      --------  113 

Special   Instructions     ---------  113 

Accounts   with    Similar   Names     ------  114 

Accounts  of  Women    ---------114 

Poorly  Written  Figures     -      -      -      -      -      -      -      -114 

Lunch    Hours    and    Conditions      -      -      -      -      -      -  114 

Before    Leaving    at    Night      -------  115 

Statements  of  Accounts     --------  115 

Second    Day   of   Month     -  -      -  116 

"Balancing"  Statements     -      -      -      -      -      -      -      -116 

Short-Footings        ----_--___  117 

Cancelled  Checks    ----------  117 

Envelopes  ------------  117 

Left    Over   Statements   and    Envelopes     -  117 

Average      Balances       ---------  117 

New   Cards   and    Closed    Cards     ------  118 

Time   Limit  for  Average   Balances     -       -       -      -      -  118 

Yearly  Averages     ----------118 

End    of    the    Month     ---------  119 

First    of    Month      -      -       -  -119 

Interest    to    Depositors     --------  120 

Suggestions    for    Locating    Differences      -  121 


INTRODUCTION 


An  attempt  to  establish  an  Interior  Proving  department 
to  receive  checks  from  the  tellers,  assort  them  into  bookkeep- 
ers' subdivisions  and  prove  them  to  the  tellers'  figures,  was 
made  by  a  San  Francisco  bank  in  1908.  Old-style  adding 
machines  were  used,  time  was  lost  assembling  the  many  totals, 
each  bookkeeper  was  required  to  give  up  an  hour  each  day  to 
work  in  the  Interior  Proving  department,  it  was  impossible  to 
compel  co-operation,  general  confusion  resulted  and  the  plan 
was  abandoned.  An  effort  to  install  the  Baker-Vawter  loose 
leaf  ledger  system  in  the  bookkeeping  department  two  years 
later  nearly  met  with  similar  failure.  There  were  seven  ledger 
men,  seven  statement  men  and  one  clerk  assorting  checks. 
Work  of  the  fifteen  men  was  finally  redistributed;  twelve  of 
them  were  assigned  to  ledgers,  with  statement  work  in  the 
morning,  and  three  to  an  Interior  Proving  department.  The 
difficulties  ended  at  once,  the  fifteen  men  handled  more  work 
than  before,  there  was  less  friction  and  the  records  were 
clearer  and  more  convenient. 

Records  Co-related 

Few  of  the  twenty-eight  thousand  banks  in  the  United 
States  use  identical  forms  and  methods  throughout.  Certain 
principles,  however,  may  be  applied  to  all.  The  smallest 
bank  has  only  one  employee.  He  is  cashier,  teller  and  book- 
keeper. He  handles  the  work  assigned  in  larger  banks  to  the 
Paying,  Receiving,  In-Mail,  Exchange,  Collection,  Note  and 
Vault  tellers.  The  following  pages  describe  the  records  and 
work  of  these  tellers,  also  of  the  Clearing  House  teller,  the 
bookkeepers,  the  Interior  Proving  department  and  the  General 
bookkeeper.  These  records  and  methods  have  been  welded 
by  the  writer  into  a  system  which  is  practicable  alike  for  large 
and  for  small  banks,  regardless  of  the  number  of  departments 
and  the  quantity  of  work.  Other  tellers  and  departments, 
such  as  the  Certified  Checks  teller,  Shipments  teller,  Railroad 


xiv  Modem  Banking  Methods 

teller,  Steamship  teller,  Foreign  Exchange  teller,  Transit  de- 
partment, Analysis  department,  Credit  department  and  Audit- 
ing department,  are  not  included  in  the  description,  because 
the  object  is  to  make  clear  the  general  plan  of  this  system 
rather  than  to  cover  such  details. 

Records  Essential  to  This  System 

Every  check  is  assorted  and  listed  many  times  between 
its  issuance  by  the  drawer  and  its  final  return  to  him.  Many 
interdependent  records  are  developed  as  it  passes  through 
each  bank.  Each  record  in  this  system  is  planned  with  the 
others  in  mind.  All  are  co-related.  Tellers'  blotters  are 
consolidated  and  balanced  by  the  tellers.  Each  teller  balances 
his  work  at  frequent  intervals,  independently  of  the  other 
tellers;  together  the  blotters  make  one  complete  and  uniform 
record,  arranged  as  if  the  work  of  all  the  tellers  were  done  by 
one  large  department  or  by  one  man.  The  totals  of  records 
in  the  Bookkeeping  and  other  departments  must  balance  with 
and  check  respective  totals  on  the  tellers'  blotters.  They  are 
then  carried  to  the  General  books  and  must  be  correct  in 
order  that  the  General  books  shall  balance.  The  general 
books  must  balance  with  the  totals  of  the  tellers'  blotters. 
The  blotters  and  other  records  form  an  open  history  in  which 
the  course  of  every  check  through  the  bank  can  be  readily 
traced. 

The  following  records  are  essential  to  this  system : 

The  tellers'  blotters,  which  are  loose-leaf  in  form.  The 
tellers  list  all  their  items  in  detail  on  large  sheets  by  use 
of  the  adding  machine.  The  totals  are  assembled  and 
the  sheets  fastened  together  each  day  into  one  volume, 
with  the  grand  totals  on  the  top  sheet. 

The  Interior  Proving  department's  records.  When 
bookkeepers'  subdivisions  are  not  made  by  the  tellers,  an 
"Interior  Proving  department"  subdivides  Individual 
Checks  and  lists  them  direct  to  each  of  the  bookkeepers' 
subdivisions,  keeping  separate  the  checks  and  deposits 
from  the  different  tellers,  proving  the  tellers'  work  and 
furnishing  figures  with  which  the  bookkeepers  balance. 
The  Interior  Proving  department's  records  are  consoli- 
dated into  one  volume  at  the  end  of  each  day. 

The   bookkeepers'    "Daily     Check     Proof,"     or    "Daily 


Introduction  xv 

Proof  of  Checks  and  Deposits,"  which  is  an  adding  ma- 
chine record  of  all  checks  and  deposits  handled  by  the 
bookkeepers.  A  separate  sheet  is  used  by  each  bookkeeper 
and  all  are  assembled  into  one  volume  at  the  end  of  each 
day. 

The  bookkeepers'  Individual  Ledgers,  which  are  books 
of  original  entry  and  are  loose-leaf  in  form. 

The  Vault  record,  which  is  separate  from  the  Paying 
teller's  records  and  shows  the  total  amount  of  coin  and 
currency  transferred  each  day  between  the  tellers  and 
the  vault. 

The  General  Ledger,  in  which  fluctuations  in  the  bank's 
resources  and  liabilities  are  recorded,  and  in  which  the 
totals  from  all  records  are  centralized. 

These  records,  excepting  the  ledgers,  are  filed  by  dates  in  the 
Auditing  department. 

Check  Divisions 

The  following  divisions  of  checks  must  be  made  on  every 
teller's  blotter: 

Transit  Account,  to  which  are  listed  checks  on  out-of- 
town  banks  located  within  the  United  States  and  Canada, 

A.  M.  Clearing,  to  which  are  listed  checks  payable 
through  the  Clearing  House  and  to  be  cleared  during  the 
current  day, 

P.  M.  Clearing,  to  which  are  listed  checks  payable 
through  the  Clearing  House  but  too  late  for  the  current 
day's  exchanges, 

City  Cash  Collections,  to  which  are  listed  local  drafts 
or  collections  and  checks  on  other  local  banks  not  pay- 
able through  the  Clearing  House, 

General  Ledger  Checks,  to  which  are  listed  debits  to 
the  bank's  own  accounts  (such  as:  Certified  Checks,  Cash- 
ier's Checks,  Transit  Exchange  et  cetera  and  debits  against 
secured  deposits, 

Individual  Checks,  to  which  are  listed  checks  of  depos- 
itors, individuals,  firms,  corporations  and  banks. 

(Warrants  on  Treasurer  of  the  United  States  may  be 
carried  in  a  separate  division,  when  desirable.) 

After  being  listed  on  the  tellers'  blotters,  these  checks  are 
sent  to  the  various  departments  of  the  bank  for  further  record. 
The  totals  are  carried  to  the  General  books  from  the  depart- 


xvi  Modern  Banking  Methods 

merits'  records  rather  than  from  the  tellers'  blotters,  with  the 
result  that  each  department  must  balance  with  the  tellers  be- 
fore the  General  bookkeeper  can  balance. 

The  Summary  of  All  Tellers'  Blotters,  attached  to  and  a 
part  of  the  volume  of  tellers'  blotters  for  the  day,  shows  one 
final  total  for  each  division  of  checks,  also  one  total  each  for 
debits  and  credits  to  various  General  Ledger  accounts.  The 
Summary  contains  debit  and  credit  totals  with  which  the 
General  books  must  balance.  The  General  bookkeeper  is  not 
obliged  to  assemble  the  tellers'  figures  or  to  locate  errors 
which  the  tellers  have  overlooked.  The  tellers  consolidate 
and  prove  their  own  figures  and  staple  their  blotter  sheets  into 
one  volume,  before  the  blotters  are  delivered  to  the  General 
bookkeeper. 

Items  Readily  Traced 

One  test  of  a  successful  system  is  that  information  can  be 
readily  obtained.  With  these  records,  a  deposit  of  a  given 
amount  can  be  located  in  a  moment  on  one  of  the  tellers' 
blotter  sheets  and  on  a  bookkeeper's  Daily  Deposit  Proof 
sheet,  from  which  it  can  be  readily  traced  to  the  bookkeeper's 
ledger.  An  individual  check  is  traced  through  the  Interior 
Proving  department's  records  from  a  teller  to  a  bookkeeper's 
subdivision  and  thence  to  his  Daily  Check  Proof  sheet  and 
one  of  his  ledger  accounts  or,  in  the  opposite  direction,  from 
the  bookkeeper's  records  through  the  Interior  Proving  depart- 
ment to  a  teller's  blotter.  Checks  are  readily  traced  from  a 
department's  records  through  the  teller's  blotters  to  the 
deposit  tags.  Information  as  to  all  the  transactions  in  one 
account  for  a  given  period  is  obtained  by  reference  in  the 
ledger  to  one  page  or  set  of  pages  containing  a  record  of  the 
transactions  for  only  that  account. 


Deposit  Tag 


Tellers   Blotters 


Heavq  Arrow  indicates 
how  a   checK  can  be  traced 
from  record  to  record 


Dotted  Arrow  i  r?d  i  cat  es 
figures  transcribed  from 
one  record  to  another. 


Double  Arrow  indicates  totals 
on  one  record  balanced,  with 
totals  on  another. 


General     Ledger 


The  Essential  Record; 


Woof 


/  Individual   Ledger 


•  /ss- 


CHAPTER   I 
THE   INTERIOR  PROVING   DEPARTMENT 


Details  of  System  Vary  with  Size  of  Bank 

The  tellers'  blotters  must  always  show  the  daily  totals  of 
Individual  Checks  and  of  Individual  Deposits  or  of  Individual 
checks  and  deposits  combined  with  General  Ledger  checks 
and  deposits;  the  bookkeepers'  totals  must  always  balance 
with  the  tellers'  totals.  The  tellers  should  always  list  the 
checks  and  deposit  tags  in  their  blotters  before  they  are  given 
to  the  bookkeepers. 

In  the  small  bank  where  the  teller  is  also  the  bookkeeper, 
these  distinctions  are  followed  loosely,  if  at  all.  The  cashier, 
acting  as  teller,  lists  the  items  in  his  blotter  and  then  gives 
them  to  himself  acting  as  bookkeeper,  to  be  entered  in  the 
ledger.  As  bookkeeper,  he  checks  his  previous  teller  work. 
The  Daily  Check  Proof,  being  a  duplication  of  a  portion  of  his 
blotter,  would  serve  no  useful  purpose  and  is,  therefore, 
omitted.  The  balances  for  the  current  day  and  the  balances 
for  the  previous  day  of  those  ledger  accounts  in  which  there 
have  been  transactions  are  listed  and  separate  totals  obtained. 
If  the  difference  between  the  two  totals  is  equal  to  the  differ- 
ence between  checks  and  deposits  for  the  current  day,  the 
ledger  may  be  considered  in  balance.  Once  or  twice  a  month 
all  balances  in  the  ledger  are  listed  on  the  adding  machine  and 
totaled,  to  prove  that  the  ledger  is  in  balance. 

As  the  bank  becomes  larger,  the  bookkeeper's  work  be- 
comes more  of  a  check  on  the  teller's  work.  A  noticeable 
feature  in  many  banks  is  the  dependence  of  the  bookkeepers 
on  the  tellers.  If  the  tellers  send  their  checks  and  deposit  tags 
frequently  and  promptly  to  the  bookkeepers  and  if  they  list 
these  items  accurately  in  their  blotters,  the  work  of  the  book- 


2  Modern  Banking  Methods 

keeper  runs  smoothly;  but  if  the  tellers  delay  their  items  or 
if  their  figures  are  inaccurate,  the  bookkeeper's  task  is 
made  difficult.  When  a  bank  has  more  than  half  a  dozen 
bookkeepers,  some  intermediate  department  to  serve  as  a 
buffer  between  the  tellers  and  the  bookkeepers  becomes  neces- 
sary. Such  a  department  may  be  called  the  "Interior  Proving 
department." 

With  only  a  few  bookkeepers,  it  is  a  simple  matter  for 
the  tellers  to  assort  deposit  tags  and  checks  alphabetically  to 
bookkeepers'  subdivisions  and  to  list  them  in  these  subdi- 
visions on  their  blotter  sheets.  When  many  bookkeepers  are 
necessary,  the  items  are  more  numerous,  there  are  more  sub- 
divisions, there  are  more  tellers  and  "strikers",*  the  assorting 
becomes  more  burdensome,  corrections  to  adjust  errors  become 
more  frequent,  more  blotter  space  is  required,  more  totals 
must  be  made  and  carried  forward  and  it  becomes  impractic- 
able for  the  tellers  to  assort  to  bookkeepers1  subdivisions.  The 
assorting  must  be  centralized.  It  may  be  done  by  the  various 
bookkeepers  in  rotation  or  may  better  be  assigned  to  one  or 
more  clerks,  the  items  to  be  assorted  by  them  at  certain  regu- 
lar hours  each  day.  These  clerks  form  the  nucleus  for  the 
"Interior  Proving  department." 

Record  and  Proof  of  Deposits 

Each  bookkeeper  must  list  each  day  on  a  Daily  Deposit 
Proof  sheet  all  the  deposit  tags  which  he  has  received;  the 
grand  total  of  these  lists  from  all  the  bookkeepers  must  balance 
with  the  total  of  deposits  on  the  tellers'  blotters.  The  num- 
ber of  deposit  tags  handled  is  smaller  than  the  number  of 
checks  and,  therefore,  the  method  of  proof  for  deposits  is  in 
many  banks  different  from  the  method  of  proof  for  checks. 
Some  one  of  the  methods  described  for  proof  of  checks  is 
usually  adopted  for  proof  of  deposits,  the  method  depending 
upon  the  number  of  deposits  handled. 

Daily  Check  Proof  in  Small  Banks 

If  each  bookkeeper  lists  correctly  all  checks  paid  by  him 
each  day  and  the  totals  from  all  the  bookkeepers  are  assembled 

*The  term  "striker"  is  sometimes  used  in  speaking  of  a  Receiving  teller's  assistant. 


The  Interior  Proving  Department  3 

at  the  end  of  the  day,  the  grand  total  of  checks  paid  so  ob- 
tained should  equal  the  grand  total  of  "Individual  Checks" 
listed  on  the  tellers'  blotters. 

Such  a  proof  of  the  total  checks  paid  by  the  bookkeepers 
can  be  readily  made  in  a  bank  with  few  bookkeepers.  There 
are  relatively  few  items  to  be  handled  by  the  tellers ;  there  are 
relatively  few  places  in  which  errors  are  apt  to  occur;  differ- 
ences can  be  readily  located ;  no  entries  of  any  kind  are  neces- 
sary to  adjust  errors  in  assorting  checks  to  bookkeepers'  sub- 
divisions. 

If  the  bookkeepers'  grand  total  of  checks  paid  does  not 
equal  the  grand  total  as  listed  by  the  tellers,  the  bookkeepers 
interchange  their  checks  and  re-list  them.  To  find  differences 
which  are  not  located  by  this  double  listing,  the  bookkeepers' 
lists  must  be  checked  off,  item  for  item*,  against  the  tellers' 
lists.  Each  bookkeeper  may  be  required  to  check  his  own 
items  against  the  tellers'  items  or  this  work  may  be  assigned 
in  rotation  to  the  different  bookkeepers  or  it  may,  as  a  penalty, 
be  assigned  to  the  bookkeeper  or  teller  whose  error  caused  the 
last  previous  "check-off." 

Interior  Proving  Department  Needed  in  Larger  Banks 

This  method  of  proof  of  checks  is  not  practicable  in  a  bank 
with  a  larger  number  of  bookkeepers  and  more  items.  The  more 
efficient  bookkeeper  is  discouraged  if  his  day's  work  is  not  com- 
pleted when  he  has  listed  his  own  checks  and  efficiently  completed 
his  own  work.  If  he  must  wait  until  all  the  others  have  listed 
their  checks  and  their  totals  have  been  assembled  or,  as  an  alter- 
native, must  interchange  checks  with  some  other  bookkeeper  and 
re-list  them,  he  has  no  incentive  for  any  higher  degree  of  efficiency 
than  that  of  the  poorest  bookkeeper  and  the  average  efficiency 
of  the  department  is  reduced.  An  Interior  Proving  department 
is  needed  to  take  the  checks  from  the  tellers,  assort  them  into 
bookkeepers'  subdivisions,  list  them,  prove  the  totals  with  the 
tellers'  blotters  and  furnish  separate  figures  with  which  each  of 
the  bookkeepers  can  balance  his  Daily  Check  Proof. 


*See  Page   121. 


4  Modern  Banking  Methods 

Interior  Proving  Department's  Proof  Sheets 

All  individual  checks,  after  they  are  listed  by  the  tellers  on 
their  blotters,  are  sent  in  bunches  to  the  Paying  tellers  at  fre- 
quent intervals,  for  verification  of  the  signatures.  A  label  is 
placed  upon  each  bunch  to  show  the  total  amount  of  checks  called 
for  by  the  teller's  blotter  and  the  name  of  the  teller.  The  checks 
are  sent  by  the  Paying  teller  to  the  Interior  Proving  department. 
They  are  assorted  by  the  Interior  Proving  department  to  book- 
keepers' subdivisions  and  a  number  assigned  to  each  subdivision. 
The  accompanying  labels  are  retained  to  be  listed  with  the  checks 
on  the  Interior  Proving  department's  proof  sheet.  These  proof 
sheets  should  be  the  full  width  of  the  adding  machine.  No 
proof  should  occupy  more  than  one  sheet.  Separate  proof  sheets 
should  be  used  for  the  checks  of  each  teller.  Not  over  four 
hundred  checks  and  not  over  six  bunches  should  be  included  in 
one  proof. 

"Transfer  totals",  showing  the  total  amount  of  checks  listed 
to  each  bookkeeper's  subdivision,  are  obtained  by  use  of  the 
Burroughs  Duplex  adding  machine  and  printed  on  the  proof 
sheets.  These  transfer  totals  are  also  accumulated  in  the  adding 
machine;  the  grand  total  so  obtained  is  printed  on  the  proof 
sheet  as  soon  as  all  the  checks  for  that  sheet  have  been  listed. 
The  tellers'  totals,  reported  on  the  labels  received  with  the  checks, 
are  then  listed  and  totaled;  this  total  may  be  called  the  "labels 
total".  The  grand  total  of  the  transfer  totals  must  balance  with 
the  labels  total.  As  soon  as  these  totals  balance,  the  checks  are 
distributed  to  the  bookkeepers.  With  separate  proof  sheets  for 
the  checks  of  each  teller,  the  labels  totals  can  be  readily  balanced 
with  total  Individual  Checks  on  each  blotter. 

Checks  from  the  Clearing  House  teller  must  always  be  rushed 
through  to  the  bookkeepers.  Clearing  House  checks  are  there- 
fore not  held  by  the  Interior  Proving  department  for  differences 
in  the  proof  sheets  but,  if  not  in  balance,  are  called  back  to  the 
lists  on  the  proof  sheets  and  immediately  distributed.  Differ- 
ences on  these  proof  sheets  are  located  and  adjusted  after  all  the 
Clearing  House  checks  have  been  distributed.  The  Clearing 
House  teller  lists  all  checks  on  his  blotter  in  the  order  in  which 
they  are  received  from  the  other  banks  and  he  is  therefore  unable 
to  keep  General  Ledger  and  Transit  checks  separate  from  Indi- 


The  Interior  Proving  Department  5 

vidual  Checks.  The  Interior  Proving  department  must  separate 
and  list  them  on  their  proof  sheets,  assigning  a  number  to  each 
of  these  subdivisions.  Transfer  totals  are  made  on  their  proof 
sheets  for  General  Ledger  Checks  and  for  Transit  Account. 

Missorts  and  Reclamations 

Occasionally  a  check  is  missorted,  listed  to  the  wrong  sub- 
division and  returned  by  one  of  the  bookkeepers  to  the  Interior 
Proving  department.  Other  checks  are  rejected  by  the  book- 
keepers, payment  refused,  and  returned  to  the  Interior  Proving 
department.  Each  error  in  assorting  and  listing  checks  other 
than  those  from  the  Clearing  House  teller  must  be  adjusted  on 
the  proof  sheet  upon  which  the  check  was  listed.  Rejected 
checks  must  be  subtracted  on  these  same  sheets  from  the  transfer 
totals,  from  the  grand  totals  and  from  the  labels  totals. 

There  are  so  many  changes  for  Clearing  House  checks  that 
it  is  not  practicable  to  make  them  on  the  original  proof  sheets. 
Many  Clearing  House  checks  are  rejected  by  the  bookkeepers  for 
endorsement,  sent  out  for  reclamation  and  returned  to  the  book- 
keepers later  in  the  day.  To  avoid  confusion  in  the  records  of  the 
Interior  Proving  department,  a  Switch  Sheet  must  be  used  for 
all  these  checks.  Only  Clearing  House  checks  should  be  listed 
on  this  switch  sheet.  The  sheet  should  be  the  same  size  as  the 
proof  sheets  and  be  bound  with  them  at  the  end  of  the  day.  It 
should  be  printed  with  a  vertical  line  through  the  center,  divid- 
ing it  into  equal  parts,  headed  "DEDUCT  FROM  bookkeeper's 
subdivision  number:"  and  "ADD  TO  bookkeeper's  subdivision 
number:".  Under  each  of  these  headings  should  be  vertical 
ruled  columns  subdivided  with  a  heading  for  each  bookkeeper's 
subdivision  and  for  General  Ledger  Checks,  Transit  checks  and 
"Reclamations",  together  with  a  space  for  proof  of  the  totals. 

Checks  held  out  from  any  bunch  of  Clearing  House  checks 
by  the  Paying  teller  for  irregular  signature  or  for  any  other 
reason  are  listed  by  him  on  the  label  attached  to  the  checks,  un- 
der the  heading  "Reclamations".  A  subdivision  number  is  as- 
signed by  the  Interior  Proving  department  to  "Reclamations"  and 
the  amounts  of  these  checks  are  listed  on  their  proof  sheets  in  the 
same  manner  as  though  "Reclamations"  were  a  bookkeeper's 
subdivision. 


6  Modern  Banking  Methods 

Checks  rejected  by  the  bookkeepers  for  endorsement  or  for 
any  other  reason  are  recorded  by  the  bookkeepers  on  the  reverse 
side  of  their  Daily  Check  Proof  sheets  and  then  returned  to  the 
Interior  Proving  department.  Those  from  the  Clearing  House 
teller  are  listed  in  the  Interior  Proving  department  on  the  switch 
sheet  under  the  headings  "Deduct  from  bookkeeper's  subdivision 

number "  and  "Add  to  Reclamations".     Clearing  House 

checks  previously  held  out  or  sent  out  for  reclamation  are,  when 
ready  for  payment,  listed  on  the  switch  sheet  under  the  headings 
"Deduct  from  Reclamations"  and  "Add  to  bookkeeper's  subdi- 
vision number  ......"  This  provides  a  record  of  the  where- 
abouts of  every  check.  The  amounts  listed  under  each  heading 
on  the  switch  sheet  are  totaled  and  a  net  total  amount  obtained 
for  each  bookkeeper's  subdivision.  The  sum  of  the  net  totals  on 
one  side  must  equal  the  sum  of  the  net  totals  on  the  other  side. 

Interior  Proving  Department's  Recapitulation  Sheets 

The  Interior  Proving  department's  proof  sheets  are  gath- 
ered, the  totals  assembled  and  proved  and  the  sheets  fastened 
together  at  the  close  of  each  day's  business.  A  final  transfer 
total  is  in  this  way  obtained  to  which  each  bookkeeper  must  bal- 
ance; also  a  final  grand  total  and  a  final  labels  total  which  must 
balance  with  each  other  and  with  the  total  of  Individual  Checks 
on  the  tellers'  blotters.  This  proof  sheet  may  be  called  the  "In- 
terior Proving  Department's  Final  Recapitulation  Sheet". 

A  Clearing  House  Checks  Recapitulation  Sheet  is  made  in 
the  same  manner,  earlier  in  the  day.  The  grand  total  and  the 
labels  total  on  this  sheet  each  contain  the  totals  of  General  Ledger 
Checks,  Transit  Account  and  Reclamations  (City  Cash  Collec- 
tions), in  addition  to  the  total  of  Individual  Checks.  The  Gen- 
eral Ledger  Checks  and  Transit  Account  totals  are  reported  to 
the  Clearing  House  teller  for  use  on  his  blotter  and,  together  with 
the  total  of  Reclamations,  are  subtracted  from  the  labels  total  on 
this  Recapitulation  Sheet,  making  the  revised  labels  total  on  this 
sheet  equal  to  the  total  of  Individual  Checks.  A  subtotal  of  the 
accumulated  transfer  totals  must  be  printed  on  the  sheet  when  all 
the  bookkeepers'  totals  have  been  listed  and  before  the  General 
Ledger,  Transit  and  Reclamations  totals  are  listed.  This  sub- 
total is  the  total  of  Individual  Checks  for  the  sheet  and,  when  the 


The  Interior  Proving  Department  7 

grand  totals  from  the  various  sheets  are  carried  forward  to  the 
Final  Recapitulation  Sheet,  must  be  used  instead  of  the  grand 
total.  It  should  equal  the  total  of  Individual  Checks  on  the 
Clearing  House  teller's  blotter. 

Dividing  the  checks  in  this  way  into  sections  and  proving  a 
few  at  a  time  makes  simple  the  balancing  of  the  bookkeepers' 
check  figures  with  the  tellers'  check  figures.  Differences  in  any 
one  section  are  not  difficult  to  locate.  Differences  between  the 
grand  total  of  the  labels  totals  and  the  grand  total  of  "Individual 
Checks"  on  the  blotters  do  not  require  the  checking  off  of  every 
item  and  are  therefore  readily  located.  Each  bookkeeper  is 
given  a  definite  total  to  which  to  balance  and  is  not  delayed  by 
inefficiency  of  other  bookkeepers.  Each  bookkeeper  can  be  given 
more  accounts  to  handle  than  if  required  to  spend  a  portion  of 
his  time  balancing  his  own  and  other  bookkeepers'  check  figures 
with  those  of  the  tellers. 


CHAPTER  II 


THE  BOOKKEEPERS 


Bookkeeping  Records 

Among  those  who  have  tested  various  bookkeeping  methods, 
the  opinion  is  gaining  ground  that  the  Baker- Vawter  plan,  more 
nearly  than  any  other,  fills  the  banker's  requirements  for  an 
ideal  bookkeeping  system.  Using  the  Baker- Vawter  system,  one 
bookkeeper  should  have  no  difficulty  in  handling  450  active 
accounts  and  as  many  inactive  as  may  fall  within  the  same 
alphabetical  sub-division;  of  these  active  accounts  35%  to  40% 
might  have  transactions  each  day,  with  a  total  number  of  checks 
each  day  not  less  than  300.  In  addition  the  bookkeeper  pays  all 
checks  over  $100  for  endorsements  and  all  checks  for  stop- 
payments,  for  amounts,  for  balances,  etc.  He  will  also  have 
time  to  write  up  the  statements  for  a  set  of  books  of  similar 
size. 

The  bookkeepers  have  a  loose  leaf  ledger  with  a  separate 
page  for  each  account;  there  is  no  cash  book,  journal  or  balance 
sheet,  the  ledger  being  the  book  of  original  entry.  Each 
bookkeeper  before  he  leaves  at  night  must  have  all  checks  and 
deposits  entered  in  his  ledger  and  all  balances  changed  for 
accounts  which  have  moved  during  the  day.  He  must  also  list, 
on  the  adding  machine,  all  checks  received  by  him  during  the 
day  and  the  total  of  this  Daily  Check  Proof  must  agree  with 
the  Interior  Proving  department's  total  for  his  sub-division.  He 
must  fill  in  the  front  page  of  his  ledger,  showing:  total  checks 
for  the  day,  total  deposits,  net  change,  net  total  of  balances, 
total  overdrafts  and  total  credit  balances.  These  figures  are 
reported  to  the  General  bookkeeper,  who  must  use  them  in 
balancing  the  General  books  of  the  bank.* 


*See  Page  97. 


The  Bookkeepers  9 

Balances  Compared 

The  checks  and  deposits  are  exchanged  by  the  bookkeepers 
and  written  on  statements  the  following  morning,  so  that  one 
man  writes  statements  for  one  sub-division  in  the  morning  and 
ledgers  for  a  different  sub-division  in  the  afternoon.  All  ac- 
counts must  be  kept  in  the  same  order  in  the  statement  binders 
as  in  the  ledgers.  The  balances  of  all  changed  accounts  are 
called  from  the  statements  to  the  ledgers  and  must  agree. 

These  statements  facilitate  the  balancing  of  the  ledgers. 
Without  them,  the  ledgers  must  be  proved  every  day,  time  is  lost 
reviewing  entries  and  computations,  differences  occur  more  often 
and  are  more  difficult  to  locate.  Most  depositors  accept  state- 
ments in  lieu  of  having  their  pass  books  balanced.  For  the  few 
who  do  not  do  so,  the  total  amount  of  checks  paid  can  be  carried 
from  the  statements  to  the  pass  books. 

Proof  of  Ledgers 

Each  bookkeeper  must  prove  his  ledger  twice  a  week*  by 
making  an  adding  machine  list  of  all  accounts;  this  list  must 
agree  with  the  figures  in  front  of  his  ledger  which  he  has 
previously  reported  to  the  General  bookkeeper. 

A  bookkeeper  who  is  careless  and  inaccurate  in  the  calling 
of  his  statements  will  have  difficulty  in  balancing  his  ledger  and 
will  consume  much  time  in  looking  for  differences.  The  cash 
book  and  balance  sheet  system  invite  carelessness  in  calling 
statements,  because  the  balancing  of  the  bookkeeper's  other 
records  does  not  depend  upon  accurate  calling  of  the  state- 
ments. During  the  first  few  days  or  even  weeks  after  the 
adoption  of  the  system  here  described,  the  time  spent  in  looking 
for  differences  is  frequently  so  great  as  to  make  the  system 
seem  a  failure  but  the  men  soon  learn  the  need  of  accuracy. 

New  employees  should  be  required  to  balance  every  day, 
so  as  to  minimize  the  time  involved  in  looking  for  their  dif- 
ferences, but  the  required  number  of  proofs  may  gradually  be 
diminished  until  it  reaches  two  a  week.  A  man  who  cannot 
get  on  a  twice-a-week  basis  for  ledger  proofs  is  not  competent 
to  hold  a  bookkeeper's  position. 


*For  methods  in  smaller  banks,  see  Page  13. 


10  Modern  Banking  Methods 

The  above  is  a  general  outline  of  the  bookkeeping  system. 
The  following  are  minor  details  which  will  be  developed  when 
the  system  is  put  into  practice.* 

Inactive  Accounts 

An  "Inactive  Account"  is  one  which  has  had  no  trans- 
actions for  over  two  months.  The  "Inactives"  are  kept  in 
the  back  part  of  the  ledger,  separate  from  the  active  ac- 
counts. Directly  in  front  of  these  inactive  accounts,  on  a 
ledger  page  headed:  "Inactive  Accounts  ^bookkeeper's  subdivision)  " 
is  an  adding  machine  list  of  their  balances.  The  total  of  this 
list  is  treated  on  the  ledger  page  as  a  deposit  and  the  ledger 
page  is  handled  in  the  same  manner  as  the  page  for  an  ordinary 
active  account.  In  listing  the  accounts  to  prove  the  ledger, 
its  balance  is  used  instead  of  listing  the  balances  for  the  fifty 
or  more  inactive  accounts  carried  by  each  bookkeeper.  The 
ledger  sheet  for  an  account  which  becomes  active  is  treated 
on  this  page  as  a  debit  and  its  balance  is  deducted  from  the 
balance  of  "Inactive  Accounts",  the  sheet  being  transferred  to 
the  active  section  of  the  ledger  before  any  checks  or  deposits 
are  entered  on  it.  Additions  to  the  list  of  inactive  accounts  are 
made  on  the  first  day  of  each  month. 

Accounts  of  Banks 

This  system  can  be  readily  adapted  to  the  bank  accounts. 
A  variation  in  the  ruling  of  the  ledger  pages  is  necessary  for 
different  classes  of  accounts.  All  must  provide  for  daily  total 
checks,  total  deposits  and  balance.  Description  in  the  ledgers 
of  office  debits  and  office  credits  is  desirable.  Checks  and 
deposits  need  not  be  described.  Accounts  of  individuals, 
firms  and  corporations  have  few  transactions  other  than 
those  covered  by  checks  and  deposits.  Several  checks-in- 
detail  columns  are  necessary  but  no  deposits-in-detail  column 
and  only  one  memorandum  column.  Accounts  of  depositing 
banks  require  fewer  checks-in-detail  columns  but  must  pro- 
vide for  deposits  in  detail  and  must  have  a  memorandum 
column  in  front  of  each  detail  column.  Accounts  of  banks 


*See   also:    "Appendix;   General  Instructions   to   Bookkeepers." 


The  Bookkeepers  11 

with  which  accounts  are  carried  ("Exchange  banks")  require 
more  room  for  description  and  must  have  a  special  column 
for  debit  balances. 

Bank  Balance  Sheet 

For  use  of  the  officers,  a  bank  balance  sheet  is  desirable. 
One  can  be  ruled  to  fit  the  middle  space  of  the  adding 
machine  and  printed  to  show  the  names  of  all  bank  accounts, 
with  six  spaces  after  each  name,  one  for  each  day  in  the 
week.  The  balances  are  each  day  listed  on  this  sheet  from 
the  ledgers  and  the  totals  proved.  In  this  way  each  balance 
sheet  is  made  to  be  part  of.  a  valuable  reference  book  for  the 
officers  and  at  the  same  time  serves  the  purpose  of  a  daily 
proof  of  the  ledger  for  each  bank-bookkeeper.  They  are  also 
used  in  computing  the  monthly  interest  payments. 

Check-List  a  Short-Cut 

The  bank-bookkeepers  use  a  "check-list",  written  each 
day  on  the  Burroughs  Duplex  adding  machine.  A  total  is 
made  of  the  drafts  paid  for  each  bank  account.  The  grand 
total  plus  any  office  debits  must  agree  with  the  total  charged 
by  the  Interior  Proving  department  and  this  balancing  is 
done  before  any  entries  are  made  in  the  ledger.  The  transfer 
totals  and  the  office  debits  are  then  posted  to  the  ledger. 
This  facilitates  the  work  and  simplifies  the  record  in  the 
ledger. 

The  same  plan  can  be  used  to  advantage  on  the  individual 
books,  by  each  bookkeeper  making  up  a  list  of  the  names 
of  his  heaviest  accounts  and  each  day  listing  the  checks  for 
each  of  these  particular  accounts  on  the  adding  machine, 
then  posting  the  grand  total  to  the  Daily  Check  Proof  and 
the  transfer  totals  to  the  ledger. 

Another  method  which  can  be  used  either  in  conjunction 
with  or  instead  of  this  method  is  to  head  one  specially  ruled 
page  for  each  large  account,  number  it  consecutively  with 
the  other  ledger  pages  for  the  same  account  and  use  it  on 
the  adding  machine,  not  every  day,  but  only  when  the  number 
of  checks  for  the  account  makes  it  worth  while. 


12  Modern  Banking  Methods 

Advantages 

One  of  the  advantages  of  this  system  is  that  the  entire 
record  for  each  account  is  by  itself,  a  feature  that  does  not 
appeal  to  many  people  before  the  adoption  of  the  system 
but  which  seems  almost  indispensable  after  one  has  had  the 
privilege  of  using  such  records.  At  the  same  time  the  work 
is  not  inconveniently  scattered;  each  bookkeeper,  in  making 
his  proof  of  checks  and  deposits  each  day,  produces  on  one 
sheet  of  paper  a  compact  record  of  the  amounts  of  all  checks 
and  deposits  for  accounts  on  his  division  of  the  books. 

Another  important  feature  is  that  through  this  system  it  is 
possible  to  use  the  adding  machine  to  good  advantage  and  to 
thereby  relieve  the  bookkeeper  from  much  of  that  mechanical 
grind  which  usually  makes  bank  bookkeeping  so  tedious.  The 
bookkeeper's  time  and  energy  is  kept  free  for  more  important 
work,  such  as  making  each  entry  in  the  correct  account, 
preventing  overdrafts,  rejecting  checks  upon  which  payment 
has  been  stopped  and  so  forth. 

The  only  accounts  handled  each  day  are  those  which 
have  a  change  during  the  day;  practically  all  work  on  other 
accounts  is  eliminated. 

With  a  growing  business  it  is,  from  time  to  time,  neces- 
sary to  increase  the  number  of  bookkeepers;  the  loose  leaf 
system  makes  it  possible  to  make  such  a  change  on  a 
moment's  notice  and  without  destroying  the  old  record  forms 
or  waiting  to  secure  new  bound  books. 

When  it  is  found  that,  through  changes  in  accounts,  one 
bookkeeper's  work  has  become  too  great  and  another's 
relatively  lighter,  a  few  pages  can  be  transferred  from  one 
bookkeeper's  subdivision  to  another,  in  this  way  equalizing 
the  work  between  bookkeepers. 

In  the  Auditing  department  another  advantage  in  con- 
nection with  this  loose  leaf  system  has  recently  developed. 
It  is  essential  to  have  each  depositor  acknowledge  correct- 
ness of  his  account.  Many  of  these  acknowledgements  can- 
not be  obtained  without  tracing.  A  proper  method  of  filing 
the  ledger  pages  will  ensure  their  being  traced.  All  pages 
for  closed  accounts  should  be  sent  each  day  direct  to  the 
auditors  and  by  them  kept  in  one  binder  until  the  acknowl- 


The  Bookkeepers  13 

edgments  of  correctness  are  received,  at  which  time  they 
may  be  transferred  to  their  final  resting  place.  Likewise, 
each  bookkeeper  should  be  given  one  main  transfer  binder, 
to  which  he  transfers,  each  day,  those  ledger  pages  which 
have  been  filled.  He  is  not  allowed  to  remove  them  from 
this  binder  until  they  have  been  checked  off  by  the  Auditing 
department.  The  pages  for  those  accounts  which  have  not  been 
acknowledged  to  be  correct  are  thus  kept  constantly  in  view. 
The  bookkeeper  in  order  to  keep  the  contents  of  his  transfer 
binder  within  moderate  limits  is  anxious  to  have  all  accounts 
verified  by  the  depositors.  The  bookkeepers  therefore  prod 
the  Auditing  department  whenever  the  Auditing  department 
becomes  lax  about  prodding  the  depositors. 

Variations  in  Smaller  Banks 

In  some  of  the  smaller  banks,  the  Daily  Check  Proof, 
the  Deposit  Proof  and  the  Ledger  Proof  are  all  combined  on 
one  wide  sheet  of  paper.  Deposits  are  listed  in  the  first 
column  and  checks  in  the  second  and  third.  The  new  balances 
for  all  accounts  in  which  there  have  been  any  transactions 
during  the  day  are  listed  in  the  fifth  column.  The  previous 
day's  balances  for  the  same  accounts  are  listed  in  the  same 
operation*  in  the  fourth  column,  separate  totals  being  ob- 
tained for  the  old  and  for  the  new  balances.  The  difference 
between  the  old  and  new  balances  must  be  equal  to  the 
difference  between  the  checks  and  deposits.  This  method  of 
proof  is  a  short  cut  only  when  less  than  20%  of  the  balances 
change  each  day. 


*By    use    of    the    Burroughs    Duplex    adding    machine    with    shuttle    carriage. 


CHAPTER  III 


TELLERS'   BLOTTERS:  OLD   METHODS 
INCOMPLETE 


An  incident  is  called  to  mind  which  occurred  several 
years  ago  under  the  old  style  (and  still  much  used)  blotter 
system.  The  Paying  tellers  one  Wednesday  night  reported 
a  shortage  of  $1,000.  No  explanation  of  the  shortage  could 
be  found  in  any  of  the  Paying  teller's  transactions  of  the  day. 
A  thorough  investigation  throughout  the  bank,  covering  all 
the  work  of  all  the  tellers,  developed  only  one  possible  clew 
and  that  very  weak.  One  of  the  Receiving  tellers  had  on 
the  previous  Monday  altered  one  of  that  day's  deposit  tags, 
by  increasing  the  amount  of  gold  listed  on  the  tag  from 
$11,345  to  $12,345,  at  the  same  time  increasing  the  total  of 
the  tag  from  $64,586.75  to  $65,586.75.  There  was  no  apparent 
relation  between  this  alteration  and  the  Paying  teller's  short- 
age but  nevertheless  the  transaction  was  carefully  reviewed. 
The  teller  had  counted  the  gold  twice  and  was  sure  he  had 
received  $12,345.  He  had  also  had  the  depositor  verify  his 
count  before  he  altered  the  tag. 

The  currency  listed  on  the  tag  was  $6,775  and  the  silver 
$1,796.50,  making  the  total  of  coin  and  currency  as  originally 
listed,  $19,916.50.  Possibly  the  deposit  tag  had  originally 
been  correct  in  its  showing  as  to  total  coin  and  currency. 
The  depositor  may  have  exchanged  $1,000  in  currency  for 
$1,000  in  gold  after  making  up  the  tag  and  before  bringing 
it  to  the  bank.  In  such  event,  the  teller  should  have  noticed, 
in  counting  the  currency,  that  there  was  only  $5,775  of 
currency  and  not  $6,775  as  listed  on  the  tag.  On  this  theory 
the  depositor  was  notified  of  the  difference  and,  finding  his 
own  cash  $1,000  over  when  he  balanced  his  books  at  the  end 


Tellers'   Blotters:     Old  Methods  Incomplete  15 

of  the  week,  he  reimbursed  the  bank  for  their  $1,000  short- 
age. 

But,  how  did  the  difference  of  Monday  at  the  Receiving 
desk  fail  to  be  discovered  until  Wednesday,  and  why  did  it 
then  appear  at  the  Paying  desk? 

The  Receiving  teller  delivered  his  entire  gold,  silver, 
currency  et  cetera  to  the  Paying  teller  on  Monday.  The  count 
was  checked  by  the  Paying  teller  and  the  total  found  to 
agree  with  the  amount  called  for  by  the  Receiving  teller's 
blotter.  When  all  the  cash  from  all  the  tellers  had  been 
assembled  by  the  Paying  teller  and  the  totals  from  the  other 
tellers'  blotters  had  been  carried  into  the  Paying  teller's 
blotter,  the  count  was  checked  by  an  Assistant  Cashier  and 
the  total  compared  with  the  corresponding  total  in  the  Pay- 
ing teller's  blotter.  This  was  the  daily  routine.  In  addition 
to  this  all  of  the  coin  and  currency  in  the  bank  was  thor- 
oughly checked  on  Tuesday  by  a  National  Bank  examiner 
who  happened  to  have  selected  that  as  the  date  of  his  semi- 
annual examination.  This  would  appear  to  be  complete  proof 
that  the  bank's  cash  was  at  all  times  in  balance  with  the 
amount  called  for  by  the  blotters.  As  figures  always  were 
taken  from  the  blotters  to  the  General  books  and  never  from 
the  General  books  to  the  blotters,  it  would  seem  to  have  been 
impossible  for  any  error  at  the  Receiving  desk  on  Monday  to 
have  been  passed  along  to  the  Paying  desk  on  Wednesday 
through  the  medium  of  the  General  books.  The  only  ex- 
planation remaining  was  that  a  series  of  contra  errors  had 
been  carried  along  through  the  tellers'  blotters  from  Monday 
until  Wednesday. 

Thorough  investigation  of  the  blotters  showed  that  such 
contras  could  very  readily  have  been  made  through  the 
medium  of  the  Clearing  House  department,  as  one  set  of 
figures  from  the  Clearing  House  department  entered  into  the 
daily  make-up  of  the  Paying  tellers  and  another  set  into  the 
Receiving  teller's  figures.  The  investigation  of  every  possible 
chance  by  which  the  Clearing  House  department  could, 
through  a  contra  error  of  $1,000,  have  transferred  the  short- 
age from  the  Receiving  teller  to  the  Paying  teller,  required  a 
week's  work. 


16  Modern  Banking  Methods 

The  contra  was  never  located.  The  error  which  made 
possible  the  shortage  evidently  occurred  Monday  at  the 
Receiving  desk.  The  shortage  actually  appeared  Wednesday  at 
the  Paying  desk.  The  depositor  had  had  no  dealings  with  the 
Paying  teller  during  the  week.  The  Receiving  teller's  blotter 
of  Monday  was  in  balance.  The  Receiving  teller,  therefore, 
when  he  accepted  from  the  depositor  $1000  for  a  difference 
which,  according  to  his  records,  did  not  exist,  placed  himself 
and  the  bank  in  an  apparently  false  position.  If  he  had  turned 
in  his  coin  and  currency  at  the  close  of  each  day's  business 
to  a  Vault  teller  instead  of  to  the  Paying  teller,  the  difference 
would  probably  have  been  found  immediately;  whenever 
found,  it  would  have  appeared  at  the  Vault  rather  than  at 
the  Paying  desk  and  could,  with  better  grace,  have  been 
claimed  from  the  depositor. 

It  should  not  be  possible  for  the  Paying  teller  to  be 
thrown  out  of  balance  in  the  record  of  his  transactions  with 
the  public  through  his  failure  to  properly  check  the  count 
of  currency  received  from  tellers.  Currency  should  not  be 
received  by  him  from  other  tellers.  Tellers  should  not  inter- 
change any  coin  or  currency  and  should  have  no  direct  deal- 
ings with  each  other. 

The  blotter  system  was  defective  in  that  it  gave  power 
to  the  Clearing  House  department  to  cause,  either  deliberately 
or  accidentally,  a  difference  in  one  department  to  appear  in 
another  department.  It  was  also  defective  in  that  a  complete 
audit  of  the  transactions  was  impossible  within  a  reasonable 
time. 

Steps  were  immediately  taken  to  prevent  any  cash  trans- 
actions between  tellers  and  to  so  reconstruct  the  blotter 
system  that  a  contra  error  between  tellers  cannot  occur,  that 
the  blotters  can  be  thoroughly  checked  in  an  hour  instead  of 
requiring  a  week  and  being  then  uncertain  and  that  they 
must  be  checked  automatically  each  day. 

The  tellers'  blotters  are  books  of  original  entry  and 
should  be  as  clear  and  convenient  for  reference  as  the  ledger 
records.  Checks  and  deposits  are  entered  from  the  original 
documents  both  in  the  blotters  and  in  the  ledgers.  A  check 
or  a  deposit  is  sometimes  misplaced  before  reaching  the 


Tellers'  Blotters:     Old  Methods  Incomplete  17 

ledger;  they  are  sometimes  entered  on  the  wrong  ledger 
pages.  The  fact  that,  on  their  ledger  page  under  date  of 
June  25th,  there  is  no  record  of  a  $243  deposit  to  the  credit 
of  Jones  and  Company  is  good  evidence  that  Jones  and 
Company  did  not  make  such  a  deposit  but  it  is  not  conclusive 
evidence.  The  amount  may  have  been  credited  to  some  other 
account.  The  depositor  may  have  used  the  wrong  rubber 
stamp  in  placing  the  account  name  at  the  head  of  his  deposit 
tag.  The  fact,  however,  that  no  deposit  of  such  an  amount 
was  recorded  on  the  tellers'  blotters  on  June  25th  can  be 
accepted  as  conclusive  evidence  that  no  such  deposit  was 
made. 

The  blotters,  in  proper  form,  with  loose  leaf  sheets  for 
each  teller,  gathered  into  one  volume  at  the  close  of  each 
day's  business,  are  clear  and  convenient  for  reference  and 
therefore  of  much  value.  The  old  time  blotters  were  so 
incomplete  and  inconvenient  as  to  be  practically  valueless 
after  a  few  months.  The  loose-leaf  blotters  form  a  complete, 
concise  record  of  all  transactions,  are  at  all  times  of  great 
value  for  reference  and  should  be  part  of  the  permanent 
records  of  every  bank. 


CHAPTER  IV 


THE  VAULT  TELLER 


Having  determined  to  reconstruct  the  tellers'  blotter 
system,  the  fact  must  be  recognized  that  the  Paying  teller  is 
usually  called  upon  to  perform  two  functions,  that  of  Paying 
teller  and  that  of  Vault  teller.  In  the  morning,  acting  as 
Paying  teller,  he  receives  from  himself  as  Vault  teller, 
sufficient  coin  for  his  expected  use  for  the  day.  He  then  acts 
strictly  as  Paying  teller  until  after  his  own  day's  work  is 
balanced,  after  which,  acting  as  Vault  teller,  he  accepts  from 
himself  as  Paying  teller  and  from  all  other  tellers,  all  coin, 
currency  and  cash  items  which  they  may  have  in  their  tem- 
porary possession.  He  assembles  all  this  coin  et  cetera,  enters 
figures  from  each  of  the  tellers  in  his  "Paying  teller's"  blotter 
and,  for  a  second  time  that  afternoon,  strikes  a  balance.  He  has 
now  been  acting  as  Vault  teller  and,  as  such,  is  the  custodian 
of  the  bank's  cash. 

Where  possible,  these  separate  functions  should  be  per- 
formed by  separate  men,  a  Paying  teller  and  a  Vault  teller. 
The  Vault  teller,  if  he  has  unoccupied  time,  may  count  and 
assort  currency  or  take  charge  of  the  bank's  supplies.  He 
may  make  up  and  send  out  shipments;  but  the  amounts 
shipped  must  originate  with  a  Paying  teller  or  a  Shipments 
teller  and  not  at  the  Vault;  the  debits  must  go  through  a 
teller's  blotter.  If  one  man  must  be  both  Vault  teller  and 
Paying  teller,  he  should,  nevertheless,  keep  the  two  sets  of 
records  entirely  separate.  The  Vault  record  can  be  very 
simple.  It  should  show: 

Balance  in  Vault  when  vault  was  opened    $ 

Coin  and  currency  to  tellers      -      -      -    $ 


Balance  in  Vault  at  3  p.m.     -      -      -      -    $, 
Coin  and  currency  from  tellers    -      -      -    $, 


Balance  in  Vault  when  vault  is  closed    -    $. 


The  Vault  Telkr  19 

The  Vault  teller,  as  such,  has  no  dealings  with  the 
depositors.  His  dealings  are  exclusively  with  the  tellers. 
The  nearest  he  comes  to  dealing  with  outsiders  is  when  he 
receives  direct  from  the  Clearing  House  or  pays  direct  to  the 
Clearing  House,  from  the  vault,  the  cash  balance  represent- 
ing the  day's  exchanges.  But  even  here  his  records  show 
transactions  with  the  tellers  only.  The  "Clearing  House 
teller's"  records  show  that  the  local  Clearing  House  teller 
received  from  or  paid  to  the  Clearing  House  an  amount 
representing  the  difference  in  the  daily  exchanges  and  that 
this  amount  was  either  delivered  to  or  obtained  from  the 
Vault.  The  Vault  teller,  while  actually  dealing  with  the 
Clearing  House,  has  been,  according  to  the  records,  dealing 
only  with  the  local  Clearing  House  teller. 


CHAPTER  V 


THE  CLEARING  HOUSE  TELLER 


While  speaking  of  the  "Clearing  House  teller,"  it  is  well 
to  give  a  moment's  thought  to  his  department.  The  work  of 
the  Clearing  House  department  is,  under  the  old  system, 
among  the  most  complicated  of  any  in  the  bank.  Its  figures 
enter  into  the  final  make-up  of  the  Receiving  tellers  and  of 
the  Paying  tellers;  differences  almost  any  place  in  the  bank 
are  very  likely  to  turn  up  in  the  Clearing  House  department 
or,  what  is  worse,  to  be  passed  by  it  along  to  some  other 
department. 

To  simplify  and  improve  these  conditions,  it  is  necessary 
to  recognize,  first,  the  distinct  functions  which  are  actually 
being  performed  and,  then,  those  which  ought  to  be  per- 
formed, by  the  department.  One  necessary  function  is  that  of 
"Clearing  House  teller." 

Every  check  paid  by  the  bank,  every  debit  to  a  depositor's 
account,  every  deposit,  must  be  entered  in  some  teller's 
blotter  before  it  is  handled  by  the  bookkeepers.  In  many 
banks,  more  checks  reach  the  bookkeepers  through  the  Clear- 
ing House  department  than  from  any  other  source.  Tradition 
made  it  at  one  time  seem  necessary  to  have  the  totals  of 
these  checks  entered  in  the  Paying  teller's  blotter.  This  not 
only  is  unnecessary  but  it  complicates  the  record.  A  separate 
blotter  should  be  given  to  the  Clearing  House  department; 
the  head  of  this  department  is  then  the  "Clearing  House  tel- 
ler." On  his  blotter  are  listed  in  detail  all  checks  paid 
through  the  clearing;  there  should  be  no  relation  at  any 
time  between  his  blotter  and  that  of  the  Paying  teller. 
Recognizing  the  "Clearing  House  teller"  and  giving  to  him 
an  individual  blotter,  is  a  long  step  toward  the  simplification 
of  the  bank's  records. 


The  Clearing  House  Teller  21 

Out-Clearing  Department 

In  addition  to  the  in-coming  clearing,  the  Clearing  House 
department  also  lists  all  of  the  out-going  clearing.  When- 
ever the  number  of  transactions  warrants  it,  the  Out-Clearing 
department  can  be  entirely  separate  from  the  Clearing  House 
teller  and  his  department;  the  only  relations  the  departments 
need  have  with,  each  other  will  be  once  each  day  when  the 
Out-Clearing  department  gives  to  the  Clearing  House  teller, 
in  envelopes  ready  for  delivery,  its  entire  holdings  of  out- 
going checks,  together  with  a  proved  total.  This  total  is 
entered  by  the  Clearing  House  teller  on  the  debit  side  of  his 
blotter  under  the  heading  "Total  C.  H.  Checks  Cleared  to- 
day"; the  Clearing  House  teller  exchanges  these  checks  at 
the  Clearing  House. 

City  Cash  Collections 

It  is  a  common  practice  for  the  tellers  to  charge  to  the 
Clearing  House  department,  as  clearing,  all  cash  items  pay- 
able in  the  bank's  own  city,  even  though  some  of  the  items 
are  drawn  on  savings  banks  or  for  some  other  reason  can- 
not be  collected  through  the  Clearing  House.  It  complicates 
the  work  of  the  Clearing  House  department  to  charge  to  the 
department  any  items  not  payable  through  the  Clearing 
House.  Such  items  should  be  handled  by  the  Collection  tel- 
ler and  not  through  the  Clearing  House  department.  This 
change  can  be  very  readily  brought  about  by  adding  to  the 
General  books  an  account  entitled  "City  Cash  Collections". 
The  tellers  will  thereafter  assort  all  checks  handled  by  them 
into  five  divisions  instead  of  four,  i.e.  Out-Clearing,  Transit,  In- 
dividual Checks,  General  Ledger  Checks  and  City  Cash  Collec- 
tions. After  leaving  the  tellers,  the  Out-Clearing  is  assorted, 
listed  and  proved  by  the  "Out-Clearing  department",  the  Transit 
by  the  Transit  department,  Individual  Checks  by  the  bookkeepers 
through  the  medium  of  the  "Interior  Proving  department",  Gen- 
eral Ledger  Checks  by  the  General  bookkeeper  and  City  Cash 
Collections  by  the  Collection  department. 

A  separate  record  is  made  by  the  Collection  department 
of  each  item  which  has  been  charged  to  City  Cash  Collec- 
tions, except  that  items  from  one  teller  on  one  firm  may  be 


22  Modern  Banking  Methods 

grouped  and  given  one  City  Cash  Collections  number.  By 
use  of  carbon,  these  records  are  made  in  duplicate  on  forms 
which,  for  convenience  of  the  messengers,  are  about  the  size 
of  an  ordinary  check.  The  carbon  copy  is  pinned  to  the  item 
and  used  by  the  messengers  as  a  collection  tag,  saving  them 
from  recording  in  their  collection  books  any  information  other 
than  the  number,  amount  and  fate  of  each  such  item.  This 
tag  should  be  of  a  different  color  from  the  original,  which  is 
held  by  the  Collection  department  in  lieu  of  the  item  itself 
and  on  which  is  later  recorded  the  final  disposition  of  the 
item. 

For  any  item  held  in  City  Cash  Collections  over  twenty- 
four  hours,  the  written  authorization  of  the  auditor  should 
be  obtained  on  the  original  record.  The  "O.K."  should  be 
dated  and  should  be  renewed  each  day  until  the  item  is  finally 
paid.  This  audit  is  important,  takes  up  very  few  minutes 
each  day  and  is  entirely  practicable  under  this  system.  When 
the  items  are  carried  in  the  Clearing  House  records  or  in  the 
Paying  tellers'  cash,  an  effective  check  on  them  is  almost  im- 
possible. 

Reclamations 

It  is  very  desirable,  from  an  Auditing  viewpoint,  that  the 
Clearing  House  teller's  blotter  show  a  total  of  checks  paid 
through  the  clearing  identical  with  the  total  amount  of  checks 
received  from  the  Clearing  House.  It  would  seem,  upon  first 
thought,  that,  unless  some  error  has  been  made  in  the  listing 
of  the  checks,  these  two  amounts  must  be  equal.  Of  all  the 
checks  presented  for  payment  through  the  clearing,  however, 
there  are  each  day  a  few  which  must  be  rejected.  These  are 
sent  out  for  reclamation  and  reduce  the  total  of  checks  paid 
to  an  amount  smaller  than  the  total  of  checks  received  from 
the  Clearing  House.  In  those  banks  in  which  the  in-coming 
clearing  figures  are  carried  into  the  Paying  teller's  make-up,  the 
totals  of  checks  actually  charged  against  depositors'  accounts 
and  against  General  Ledger  accounts  are  frequently  the 
amounts  recorded,  the  total  whiclr  has  been  charged  at  the 
Clearing  House  against  the  local  bank  not  appearing  any- 
where in  the  tellers'  blotters  or  in  the  General  books. 


The  Clearing  House  Teller  23 

To  improve  upon  and  simplify  this  condition,  it  has  been 
found  very  practicable  to  debit  all  reclamations  to  City  Cash 
Collections.  There  should  be  included  in  this  debit,  in  addition 
to  reclamations,  the  total  of  all  checks  paid  through  the  clearing 
for  other  local  banks.  A  separate  charge  is  made  to  Transit 
Account  for  checks  on  out-of-town  banks  paid  through  the 
clearing.  The  total  debits  to  City  Cash  Collections  and  to 
Transit  Account  and  the  totals  of  checks  paid  against  depositors' 
accounts  and  against  General  Ledger  accounts  are  all  entered 
on  the  credit  side  of  the  Clearing  House  teller's  blotter  and 
should  together  equal  the  amount  of  checks  received  from 
the  Clearing  House.  Any  difference  between  the  two  totals 
will  then  indicate  an  error  in  the  listing  either  by  one  or  more 
of  the  banks  with  which  the  checks  originated  or  by  the  bank 
to  which  the  checks  are  cleared. 

The  reclamations  are  listed  by  the  Clearing  House  teller 
on  a  form  consisting  of  three  columns.  The  first  is  headed 
"Debit  City  Cash  Collections"  and  is  followed  by  the  sub- 
headings "C.H.No.",  "Reason  rejected",  "Drawer",  "Amount" 
and  *V".  In  this  column  are  listed  all  reclamations  which 
it  is  expected  will  be  paid. 

In  the  second  column  are  listed  checks  sent  out  for  en- 
dorsement and  which  it  is  expected  will  be  returned  in  proper 
form  for  payment.  The  sub-headings  are  "C.H.No.",  "Amount" 
and  'V".  Whenever  the  bank  to  which  one  of  these  items 
is  presented  pays  for  the  item  instead  of  correcting  the  en- 
dorsement, the  amount  and  the  description  are  then  elimi- 
nated from  the  second  and  transferred  to  the  first  column. 
When  properly  corrected  by  the  endorsing  banks,  the  re- 
mainder of  the  checks  from  the  middle  column  are  delivered 
by  the  messengers  to  the  Clearing  House  teller,  who  enters  a 
check-mark  opposite  the  record  of  each  such  corrected  item 
and  returns  the  item  to  the  bookkeepers  for  final  payment. 

The  heading  of  the  third  column,  "Credit  City  Cash  Col- 
lections", is  followed  by  the  sub-headings:  "C.H.No.", 
"Checks  received  in  payment"  and  "Coin  received  in  pay- 
ment". The  messengers  report  to  the  Clearing  House  teller 
when  all  reclamations  have  been  redeemed  but  deliver  to  the 
Collection  department  the  funds  received  in  payment.  These 


24  Modern  Banking  Methods 

amounts  are  recorded  by  the  Collection  department  in  this 
third  column,  the  total  of  which  must  equal  the  total  on  the 
debit  side  of  the  form.  When  this  work  is  completed  and  the 
two  sides  of  the  form  are  in  balance,  the  items  are  deposited 
through  the  Collection  teller's  blotter,  to  the  credit  of  the  City 
Cash  Collections. 

Errors  Between  Clearing  Banks 

One  of  the  details  which  must  be  cared  for  by  the  Clear- 
ing House  teller  is  the  adjusting  of  errors  made  by  other 
banks  in  their  lists  of  checks  presented  to  his  bank  through 
the  clearing.  It  is  possible,  if  not  altogether  practicable,  for 
a  bank  to  make  internal  arrangements  such  that  all  errors  in 
the  outgoing  clearing  will  be  located  and  corrected  before  the 
checks  leave  the  bank  but  no  such  arrangement  can  be  forced 
upon  other  banks  to  prevent  them  from  sending  in  unproved 
lists.  In  exchanging  checks  at  the  Clearing  House,  the  totals 
called  for  by  the  outgoing  lists  of  the  various  banks  are,  for 
the  moment,  accepted  as  correct  and  are  accepted  at  the 
Clearing  House  as  a  permanent  record  of  the  amounts  ex- 
changed. The  balance  in  coin  or  currency  to  be  paid  or  re- 
ceived as  a  result  of  the  day's  exchanges  is  determined 
through  the  use  of  these  figures.  To  adjust  any  error,  the 
bank  discovering  the  error  makes  direct  claim  upon,  or  pay- 
ment to,  the  bank  by  which  the  error  has  been  made. 

In-Clearing  Adjustments 

It  is  a  common  occurrence  for  the  Out-Clearing  department 
of  another  bank  to  have  listed  a  check  as  say  "22.36"  when  the 
amount  should  be  "27.36".  The  Clearing  House  teller  lists  the 
correct  amount  on  his  blotter  as  a  portion  of  his  "total  checks 
paid".  This  makes  "total  checks  paid"  $5  in  excess  of  the  fig- 
ures at  the  Clearing  House,  which  figures  show  the  amount  he 
was  supposed  to  have  received.  One  way  for  him  to  adjust  this 
error  on  the  part  of  the  other  bank  is  for  the  Clearing  House 
teller  to  obtain  $5  from  the  Vault  teller,  list  it  on  the  debit  side 
of  his  blotter  as  "Coin  and  Currency  from  Vault"  and  pay  the 
amount  to  the  bank  which  made  the  error.  But  this  method  of 


The  Clearing  House  Teller  25 

adjustment  is  not  satisfactory;  it  is  better  that  the  Clearing 
House  teller  should  have  no  coin  to  handle.  He  should  issue  a 
Cashier's  Check  and  then  show,  on  the  debit  side  of  his  blotter,  a 
deposit  to  the  credit  of  Cashier's  Checks.  In  addition  to  being 
more  convenient,  the  use  of  Cashier's  Checks  by  the  Clearing 
House  teller  and  by  the  Gearing  House  department  provides  a 
valuable  record  which  is  not  obtainable  through  the  use  of  coin. 

A  difference  in  the  opposite  direction  would  cause  "total 
checks  paid"  to  be  less  than  the  "checks  received"  figures  at  the 
Clearing  House.  Another  bank  has  listed  a  check  as  say  "48"; 
the  amount  should  be  "40".  The  Clearing  House  teller  records 
the  check  on  his  blotter  sheet  for  the  correct  amount.  "Total 
checks  paid"  is  $8  short.  A  claim  is  made  on  the  other  bank 
and  in  payment  a  Cashier's  Check,  coin  or  currency,  for  $8  is  re- 
ceived. If  a  Cashier's  Check,  the  amount  is  listed  on  the  credit 
side  of  his  blotter  as  a  debit  to  P.  M.  Clearing.  If  coin  is  re- 
ceived, it  is  handed  to  the  Vault  teller  at  the  end  of  the  day  and 
listed  on  the  Clearing  House  teller's  blotter  as  "Coin  and  Cur- 
rency to  Vault." 

If  preferred,  these  corrections  can  be  made  through  City 
Cash  Collections,  $5  being  deducted  from  and  $8  added  to  the 
reclamation  sheet,  in  which  case  the  Collection  department  will 
issue  the  $5  Cashier's  Check  and  accept  the  $8  payment.  This 
method  will  have  the  advantage  of  causing  "total  checks  paid"  as 
shown  by  the  Clearing  House  teller's  blotter  to  always  agree  with 
"total  checks  received"  from  the  Clearing  House.  The  disad- 
vantage will  be  that  occasionally  the  amount  to  be  deducted  from 
the  reclamation  sheet  will  be  larger  than  the  total  of  reclamations. 
This  will  make  the  debit  to  "City  Cash  Collections:  Reclama- 
tions" a  minus  quantity,  an  awkward  condition  which  most  bank 
clerks  wish  to  avoid. 

When  one  check  received  from  another  bank  is  for  an 
error  in  the  incoming  clearing  and  for  reclamations,  a  portion  of 
the  funds  represented  by  the  check  belongs  to  the  Clearing  House 
teller  and  a  portion  to  the  Collection  teller.  The  Clearing  House 
teller  may  list  this  check  on  his  blotter  as  a  debit  to  P.  M.  Clear- 
ing and  issue  a  Cashier's  check  to  the  order  of  the  Collection 
teller  for  the  excess  amount. 


26  Modern  Banking  Methods 

Out-Clearing  Adjustments 

It  is  well  to  glance  at  these  same  differences  and  corrections 
from  the  viewpoint  of  the  Out-Clearing  department  of  the  bank 
which  made  the  errors. 

The  $27.36  check  which  they  had  listed  as  $22.36  caused 
their  out-going  total  to  be  $5  short.  This  incorrect  total  had 
become  a  matter  of  record  at  the  Clearing  House  and  the  bal- 
ances in  settlement  for  the  day's  exchange  had  been  based  on  it. 
The  Out-Clearing  figures,  therefore,  could  not  be  altered.  The 
only  way  of  bringing  them  into  balance  with  the  tellers'  totals 
was  to  adjust  the  tellers'  totals.  The  Cashier's  Check  or  the  coin 
received  in  adjustment  of  the  difference  was  accordingly  given 
to  some  teller,  who  subtracted  the  amount  from  the  total  debit  to 
"A.  M.  Clearing"  on  the  credit  side  of  his  blotter  and  added  it, 
on  the  same  side,  to  "P.  M.  Clearing"  or  to  "Coin  and  Currency 
to  Vault." 

The  $8  over  caused  by  listing  a  $40  check  as  $48  was  ad- 
justed by  the  issuance  of  a  Cashier's  Check,  for  which  a  teller 
made  an  entry  on  his  blotter,  crediting  $8  to  Cashier's  Checks 
and  debiting  the  amount  to  "A.  M.  Clearing." 

The  Clearing  House  department,  in  making  each  adjust- 
ment, should  write  opposite  the  incorrectly  listed  amount  on  the 
original  record  words  to  this  effect:  "Should  be  $27.36;  $5 
Cashier's  Check  received  to  adjust;  Endorser  Jones  Co." 

Altering  the  tellers'  figures  to  agree  with  the  outgoing  rec- 
ords is  not  desirable.  It  is  a  practice  which  should  be  prohibited 
as  far  as  possible  and  always  most  carefully  restricted.  The 
simplest  and  best  restriction  is  a  ruling  that  all  such  changes  in 
the  tellers'  figures  be  always  made  through  the  same  teller's 
blotter.  The  auditor  then  has  a  definite  place  in  which  to  look 
for  such  changes.  The  Clearing  House  teller's  blotter  is  a  con- 
venient one  to  select  for  this  purpose;  only  a  few  out-clearing 
checks  originate  each  day  through  this  blotter  and  therefore  trans- 
actions of  this  nature  can  here  be  readily  checked.  There  is  the 
added  advantage  that  all  corrections  for  all  clearing  differences 
are  assembled  in  one  place. 


The  Clearing  House  Teller  27 

Clearing  House  Teller's  Blotter 

All  incoming  Clearing  House  checks  are  listed  with  the  add- 
ing machine  on  sheets  of  paper  the  width  of  the  machine  in  the 
order  in  which  received  from  the  various  Clearing  House  banks. 
The  sheets  are  numbered  consecutively,  commencing  each  day 
with  number  "1".  This  record  constitutes  the  Clearing  House 
teller's  blotter.  A  list  of  the  totals  from  the  various  banks  is 
made  on  the  upper  part  of  the  final  sheet,  "Total  Checks  Paid" 
being  obtained  in  this  manner. 

A  statement  of  the  Clearing  House  teller's  transactions  for 
the  day  is  made  on  the  lower  part  of  the  final  sheet.  The  com- 
bined total  of  reclamations  and  of  checks  paid  for  local  banks 
is  listed  in  this  statement  by  the  Clearing  House  teller  as  a  debit 
to  City  Cash  Collections ;  the  totals  of  General  Ledger  Checks  and 
of  Transit  Account  checks  are  listed  by  the  Interior  Proving  de- 
partment. These  three  amounts  are  added  together  to  obtain  a 
General  Ledger  total  and  subtracted  from  the  Total  Checks  Paid 
to  obtain  the  total  of  Individual  Checks.  The  statement,  when 
completed  reads  about  as  follows: 

Recapitulation  of  Clearing  House  Teller's  Blotter 

Dr.  Cr. 

Credit  Accounts  as  Follows:  Debit  Accounts  as  Follows: 

r^liiW'Q  Thpr1«  <fc  S*1  General  Ledger  Checks       $90,000 

Transit  Account        -      -          9,000 
City  Cash  Collections      -          1,000 

Total  General  Ledger    $           5  Total  General  Ledger  -    $100,000 
Individual  Checks     -      -      699,997 

Total  Deposits    -      -    $  5  Total  checks  paid : 

Total  at  C.H.  $800,000 

Plus  a  /c  error  5*1 

Minus "      " 8*1     $799,997 

Total  C.H    Checks  Deduct  from        (      10*'  (red) 

Cleared  today      750,000  A  M  Qearing      }      15*2  (Vred)'_25 

(.        8*1 
P.M.  Clearing      \      ^  lg 

Coin  and  Currency  Coin  and  Currency 

from  Vault        50,000  to  Vault    15*z     15 

$800,005  $800,005 

**The  $8  switch  between  Total  Checks  Paid  and  P.  M.  Clearing  and  the  $5 
credit  to  Cashier's  Checks  and  debit  to  Total  Checks  Paid  represent  the  two  in-clearing 
adjustments  which  have  been  described 

*2The  $10  switch  between  A.  M.  Clearing  and  P.  M.  Clearing  and  the  $15  switch 
between  A.  M,  Clearing  and  Coin  and  Currency  to  Vault  represent  two  possible  cor- 
rections  of  errors  in  Out-going  Clearing. 


CHAPTER  VI 


TELLERS'  BLOTTERS:  MODERN  METHODS 


Tellers'  Recapitulations 

A  printed  form  on  which  to  record  the  totals  should  be 
on  the  lower  right-hand  corner  of  the  final  page  of  every 
teller's  blotter.  This  form  should  be  printed  alike  on  all  the 
blotters  and  should  contain  every  heading  which  will  apply 
to  any  teller.  All  the  headings  will  not  apply  to  any  one 
teller.  Among  other  things,  a  shortage  or  an  over  in  the 
teller's  cash  should  be  provided  for;  each  teller's  debit  totals 
will  then  always  equal  his  credit  totals. 

Form  of  Blotter 

The  general  form  of  the  blotter  and  the  size,  shape  and 
texture  of  the  blotter  sheets  are  all  very  important.  These 
sheets  should  be  of  equal  length  and  width  for  all  the  tellers. 
The  paper  should  be  bond  of  about  16  pound  folio  and  should 
be  10*4  inches  wide,  so  as  to  fit  readily  into  a  Burroughs 
Duplex  adding  machine.  A  convenient  length  is  21  inches, 
which  makes  possible  the  listing  of  one  hundred  checks  in 
each  column  and  allows  ample  room  at  the  top  of  every  sheet 
for  binding  and  at  the  bottom  for  the  name  of  the  teller,  the 
date,  the  sheet  number  and  the  name  of  the  clerk  who  did  the 
listing. 

Each  teller  uses  as  many  sheets  as  the  number  of  items 
in  his  day's  work  makes  necessary,  numbering  them  through- 
out the  day  in  consecutive  order.  The  recapitulation  form  is 
printed  only  on  his  final  sheet  and  this  sheet  should  be  an 
inch  longer  than  the  others.  The  sheets  are  clamped  together 
at  the  end  of  the  day  with  the  final  sheet  on  top  and  sheet 
No.  "1"  on  the  bottom. 

Summary  of  All  Tellers'  Blotters 

A  Summary  is  each  day  made  of  all  the  tellers'  blotters. 
The  various  blotters  are  then  gathered  into  one  volume  and 
stapled  together  with  the  Summary  on  top. 


The  First  National  Hank  of  Sao  Francises 


IC,OOOX30 

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TELLERS'    BLOTTERS 


THE  TELLERS'  BLOTTERS  ARE  LOOSE-LEAF  IN  FORM.  THE  TELLERS  LIST  ALL 
THEIR  ITEMS  IN  DETAIL  ON  LARGE  SHEETS  BY  USE  OF  THE  ADDING  MA- 
CHINE. THE  TOTALS  ARE  ASSEMBLED  AND  THE  SHEETS  FASTENED  TOGETHER 
EACH  DAY  IN  ONE  VOLUME,  WITH  THE  GRAND  TOTALS  ON  THE  TOP  SHEET. 


CHAPTER  VII 


THE   PAYING   TELLERS 


Paying  Tellers'  Duties 

The  Clearing  House  figures  are  no  longer  recorded 
through  the  Paying  teller's  blotter.  The  Vault  teller  has 
taken  from  him  the  "custody  of  the  cash"  and,  with  it,  the 
assembling  of  each  day's  coin  and  currency.  "City  Cash  Col- 
lections" has  relieved  him  from  holding  and  collecting  "cash 
items".  The  bookkeepers  pay  all  checks  (other  than  those 
presented  over  the  Paying  counter)  for  amounts,  endorse- 
ments, dates  and  stop-payments.  The  work  of  keeping  the 
signature  files  and  stop-payment  records  in  an  up-to-date  con- 
dition and  of  paying  all  checks  from  all  tellers  for  signature, 
can,  if  desired,  be  transferred  to  a  "Signature  department." 

There  still  remains  with  the  Paying  teller  his  funda- 
mental work  of  paying  checks  over  the  counter  and  of  re- 
cording such  payments  in  a  blotter.  Whenever  possible, 
each  teller  should  have  a  window  by  himself,  separate  coin 
and  currency  and  a  separate  blotter. 

Their  Coin  from  Vault 

The  Vault  teller  each  morning  gives  to  the  first  Paying 
teller  any  broken  trays  of  coin  which  may  be  in  the  Vault,  a 
change  tray  and  as  many  full  trays  of  each  denomination  as 
are  likely  to  be  required  for  the  day's  payments.  To  each  of 
the  other  Paying  tellers  will  be  given  a  change  tray  and  one 
or  more  full  trays  of  each  denomination. 

Currency  for  Paying 

The  Paying  teller  must  know,  from  his  own  count,  that 
the  amount  of  currency  in  each  package  he  opens  agrees  with 
the  amount  called  for  by  the  wrapper.  As  he  seldom  has 
time  to  count  the  bills  at  the  time  the  wrapper  is  broken,  he 
must  have  done  this  checking  previously.  He  cannot  count 


The  Paying  Tellers  31 

all  his  currency  every  day  and  therefore  should  be  given  un- 
interrupted possession  of  a  working  supply,  subject,  of  course, 
to  frequent  audits.  The  only  packages  necessary  for  him  to 
check  each  morning  will  then  be  those  which  he  has  newly 
acquired  from  the  Vault  teller. 

The  Vault  teller  gives  to  the  Paying  teller  in  the  morn- 
ing, as  part  of  his  "Coin  and  Currency  from  Vault",  a  supply 
of  currency  too  large  for  one  day's  probable  requirements. 
The  Paying  teller  thoroughly  checks  the  count.  A  portion 
of  this  currency  remains  in  his  hands  at  the  end  of  the  day 
and  must  be  returned  to  the  Vault  teller  as  part  of  his  "Coin 
and  Currency  to  Vault".  This  is  the  currency  of  which  he 
should  have  uninterrupted  possession.  If  he  will  place  it  in. 
a  box  and  seal  the  box,  with  the  total  written  on  the  outside 
in  ink,  there  is  no  reason  why  this  box  should  not  be  included 
in  his  "Coin  and  Currency  to  Vault"  and  the  total  accepted 
by  the  Vault  teller  as  representing  the  amount  of  currency 
indicated.  The  total  will,  of  course,  vary  from  day  to  day. 
Such  details  as :  "Total  notes  of  other  National  Banks",  "To- 
tal Legal  Tender"  et  cetera  can  also,  if  desired,  be  shown  on  the 
outside  of  the  box.  The  contents  of  the  box  need  not  be 
examined  by  the  Vault  teller  but  should  be  checked  by  the 
auditors  frequently,  at  irregular  intervals. 

In  the  morning,  the  Vault  teller  will  deliver  to  each  Pay- 
ing teller  his  individual  currency  box  and  will  charge  the 
amount  to  him  as  a  portion  of  his  "Coin  and  Currency  from 
Vault".  The  teller  has,  to  all  intents  and  purposes,  uninter- 
rupted possession  of  his  currency  and,  at  the  same  time,  all 
cash  is  at  night  delivered  to  and  in  the  possession  of  the  Vault 
teller. 

The  Paying  teller  counts  his  coin  and  currency  each 
morning,  as  soon  as  received,  compares  the  total  with  the 
Vault  teller's  record  and,  when  satisfied  that  the  count  and 
the  record  agree,  records  the  total  on  the  debit  side  of  his 
blotter  as  "Coin  and  Currency  from  Vault".  This  is  the  only 
entry  on  the  debit  side  of  the  Paying  teller's  blotter  with  the 
possible  exception  of  a  credit  for  certified  checks.  If  more 
coin  or  currency  is  obtained  later  in  the  day,  the  new  amount 
is  added  to  the  original  total. 


32 


Modern  Banking  Methods 


Checks  Paid 

One  or  two  blotter  sheets  of  the  standard  size,  as  de- 
scribed above,  will  be  sufficient  for  one  day's  records  of  one 
Paying  teller.  Detailed  lists  of  the  checks  he  has  paid  are 
made  on  these  sheets.  Checks  on  his  own  bank  drawn  by 
individuals,  firms,  corporations  or  banks,  are  listed  as  "Indi- 
vidual Checks".  Any  other  checks  are  listed  under  the  head- 
ings: "General  Ledger",  "City  Cash  Collections",  "Transit 
Account",  "A.M.  Clearing"  or  "P.M.  Clearing".  Every  teller 
assorts  his  checks  into  these  divisions  before  listing  them  on 
his  blotter.  After  the  Paying  teller  or  his  assistant  has  listed 
a  bunch  of  checks  on  his  blotter,  the  checks  are  re-listed  by 
another  clerk  and  the  total  on  the  blotter  initialed  to  show 
that  it  has  been  verified. 

Coin  and  Currency  to  Vault 

Every  teller  counts  the  coin  and  currency  which  he  has 
on  hand  at  the  end  of  the  day  and  delivers  it  to  the  Vault, 
listing  the  total  on  the  credit  side  of  his  blotter  as  "Coin  and 
Currency  to  Vault". 

Paying  Teller's  Blotter 

When  he  has  balanced,  the  recapitulation  of  the  Paying 
teller's  blotter  will  read  about  as  follows : 


Dr. 


Recapitulation  of  Paying  Teller's  Blotter 


Credit  accounts  as  follows: 


Coin  and  Currency 

from  Vault      100,000 


Cr. 
Debit  accounts  as  follows: 

General  Ledger  Checks      -    $    2,500 
Transit  Account     -  500 

City    Cash    Collections       -  250 

Total  General  Ledger       -    $    3,250 
Individual    Checks        -      -        56,750 


Total  Checks  Paid      - 
A.M.    Clearing        - 
P.M.    Clearing        - 
Coin  and  Currency 

to  Vault 


39,000 


$100,000 


$100,000 


The  Paying  Tellers  33 

Certified  Checks 

The  work  of  certifying  checks  is,  in  most  banks,  assigned 
to  the  Paying  teller.  Some  of  the  larger  banks  require  a  Cer- 
tified Checks  teller  with  several  assistants. 

When  a  check  is  presented  for  certification,  the  teller 
must  ascertain  that  there  is  sufficient  balance  in  the  drawer's 
account  to  cover  the  amount  of  the  check.  He  places  the 
certification  stamp  upon  the  check  and,  filling  in  an  office 
debit,  charges  the  amount  to  the  drawer's  account.  The 
debit  must  be  listed  on  the  credit  side  of  the  teller's  blotter 
under  the  heading  "Individual  Checks",  then  in  the  Interior 
Proving  department's  records,  on  the  bookkeeper's  Daily 
Check  Proof  sheet  and  in  the  Individual  Ledger.  The  facts 
must  also  be  recorded  in  a  Certified  Checks  Register  and  the 
daily  total  of  this  Register  carried  to  the  debit  side  of  the 
blotter  as  a  credit  to  Certified  Checks. 

These  Certified  Checks  debits  must  be  sent  to  the  book- 
keepers at  frequent  intervals  and  given  precedence  over  other 
checks,  so  that  they  shall  not  cause  overdrafts  in  depositors' 
accounts.*  Duplicate  debit  forms,  printed  on  red  paper  and 
containing  the  words: 

DUMMY 
Original  debit  must  be  substituted  for  this  tag  today 

are  sometimes  found  useful.  They  are  filled  in  with  carbon, 
in  the  same  operation  as  the  originals,  and  are  sent  direct 
from  the  tellers  to  the  bookkeepers  as  soon  as  the  checks  are 
certified.  The  originals  are  held  for  record  in  the  blotters. 
The  bookkeeper  immediately  records  the  "dummy"  in  his 
ledger  but  enters  only  the  original  in  his  Daily  Check  Proof. 
He  replaces  the  "dummy"  with  the  original  before  giving  the 
day's  checks  to  his  statement  man. 

Placing  these  entries  through  the  Paying  teller's  blotter 
will  alter  his  figures  to  read  as  follows: 


*The  National  Banking  Act  and  most  State  banking  laws  require  that  no  check  be 
certified  unless  there  are  sufficient  funds  in  the  depositor  s  account  to  cover  the 
amount  of  the  check  and  failure  to  comply  with  the  law  is  made  a  criminal 
offense. 


34  Modern  Banking  Methods 

Recapitulation  of  Paying  Teller's  Blotter 

Dr.  Cr. 
Credit  accounts  as  follows:             Debit  accounts  as  follows: 

Certified   Checks     -      -    $     5,000    general  Ledger  Checks       -  $    2,500 

Transit  Account     -  500 

City   Cash    Collections        -  250 

Total    General   Ledger  Total  General  Ledger 

Credits    $    5,000                                       Debits  $    3,250 

Individual  Checks   -      -      -  61,750 

Total  Deposits         -      -    $    5,000        Total  Checks  Paid      -      -  $  65,000 

A.M.  Clearing  -  400 

P.M.  Clearing  -      -      -      -  600 
Coin  and  Currency                              Coin  and  Currency 

from  Vault       100,000  to  Vault      39,000 


$105,000  $105,000 


CHAPTER  VIII 


THE  RECEIVING  TELLERS 


Old  Methods  Mean  Loss  of  Time 

In  many  banks,  the  Receiving  tellers  are  frequently  obliged 
to  spend  many  of  their  evenings  looking  for  differences.  One 
"check-off"  a  week  is  not  at  all  unusual.  Differences  of  less  than 
one  dollar  are  ignored  because  of  their  frequency  and  because 
larger  differences  leave  no  time  to  look  for  any  so  small.  Every 
tag  is  thoroughly  examined  at  the  time  it  is  received,  to  make 
sure  that  all  the  items  have  been  correctly  listed  by  the  depositors. 
The  Receiving  tellers  together  form  one  department,  their  rec- 
ords are  made  in  only  one  blotter.  They  do  not  attempt  to  list 
their  own  out-clearing  checks  but  obtain  the  total  of  these  checks 
by  eliminating  all  of  the  other  tellers'  out-clearing  figures  from  the 
Clearing  House  department's  totals.  The  members  of  the  Clear- 
ing House  department  always  stay  with  the  Receiving  tellers  to 
help  find  the  differences. 

Adding  machines  are  a  great  help  in  the  work  of  listing 
checks  and  deposits  and  adding  the  lists  but,  in  many  banks,  the 
blotter  system  is  practically  the  same  as  when  all  listing  was  done 
with  pen  and  ink.  The  adding  machine  lists  are  sometimes  fast- 
ened into  the  blotters  where  the  ink  lists  were  formerly  made. 
In  some  banks,  all  the  lists  for  each  day  are  filed  in  an  envelope 
and  only  the  totals  are  posted  to  the  blotters. 

New  Methods 

The  loose-leaf  is  a  better  system,  using  paper  as  wide  as 
the  adding  machine  carriage,  making  several  lists  on  one 
sheet  and  filing  the  sheets  in  a  binder.  Any  number  of  sep- 
arate lists,  independent  of  each  other,  with  a  separate  total  for 
each  list  together  with  a  grand  total  of  all  the  totals,  can  be 
made  on  the  Burroughs  Duplex  adding  machine.  When  these 
machines  were  introduced,  it  was  only  natural  that  blotter- 
sheets  should  be  substituted  for  the  old  bound  blotters  and 


36  Modern  Banking  Methods 

that,  instead  of  balancing  their  work  only  at  the  end  of  the 
day,  the  tellers  should  list  deposits  and  checks  a  few  at  a 
time  and  prove  their  work  frequently  throughout  the  day. 
With  this  change,  it  is  no  longer  necessary  to  check-off  at 
the  time  of  receipt  every  item  on  every  deposit  tag  and  the 
tellers  have  more  time  to  see  the  vital  facts  regarding  each 
deposit  made.  The  Receiving  tellers,  through  their  assist- 
ants, now  list  their  own  out-clearing  checks.  Any  error  in 
the  footing  of  the  deposit  tags  or  in  the  listing  of  the  checks 
on  the  deposit  tags  or  in  the  blotter  work,  is  found  at  once. 
It  is  only  necessary  to  test  the  footings  of  a  portion  of  the 
deposit  tags.  Differences  other  than  in  the  coin  or  in  the 
currency  are  a  thing  of  the  past  and  night  work  is  entirely 
eliminated. 

Tellers  Separate 

Each  Receiving  teller  should,  if  possible,  be  given  an  in- 
dividual cage  and  an  individual  blotter  and  should  keep  his 
coin  and  currency  separate  from  that  of  the  other  tellers. 
Each  deposit  should  be  recorded  in  the  blotter  of  the  teller 
receiving  it,  even  though  he  may  be  an  emergency  teller  and 
may  receive  only  one  or  two  deposits. 

Name  of  Depositor 

When  a  deposit  is  offered  at  the  counter,  the  teller  must 
see  that  the  name  at  the  head  of  the  deposit  tag  is  the  name 
of  one  of  the  bank's  depositors.  Before  entering  the  amount 
of  the  tag  in  the  pass  book,  he  must  also  compare  this  name 
with  the  name  in  the  pass  book  to  see  that  they  agree. 

Coin  and  Currency  Deposited 

The  gold,  the  silver  and  the  currency,  listed  separately, 
must  each  be  carefully  examined  and  counted  and  then 
checked  to  the  tags.  No  portion  of  the  gold  should  be  trans- 
ferred from  the  counter  until  all  the  gold  has  been  counted 
and  its  total  checked  to  the  deposit  tag.  The  same  rule  ap- 
plies to  the  silver  and  to  the  currency. 

Checks  Deposited 

The  teller's  work  is  balanced  frequently  throughout  the 
day.  It  is,  therefore,  not  necessary  for  him  to  carefully  check 


The  Receiving  Tellers  37 

every  entry  on  every  tag.  He  knows  from  experience  that 
certain  depositors  are  careless  in  their  listing,  that  others  are 
inclined  to  be  inaccurate  in  the  footings.  For  the  one  he 
checks  the  listing;  for  the  other  he  tests  the  footings;  he 
checks  both  the  listing  and  the  footings  of  any  tags  which 
have  been  carelessly  or  poorly  made  out.  The  number  of  all 
these  tags  is  small  compared  with  the  total  number  of  deposits 
made.  On  the  majority  of  deposit  tags,  neither  the  footings 
need  be  checked  nor  the  listing  of  any  items  other  than  the 
coin  and  currency. 

Transferring  the  checks  from  his  counter,  the  teller  places 
them  face  down  on  a  desk  at  his  side  and,  while  so  doing, 
glances  at  the  back  of  the  checks  to  see  whether  they  have 
been  endorsed  by  the  depositor.  It  is  not  necessary  for  him 
to  look  for  technical  errors  in  the  endorsements.  Such  errors 
can  be  corrected  later,  when  they  are  discovered  and  the 
checks  rejected  by  the  bookkeepers  in  the  banks  on  which  the 
checks  are  drawn.  Technical  regularity  of  endorsements  is 
important  but  its  importance  is  not  so  great  as  to  warrant  a 
double  examination  of  the  checks.  The  bookkeeper  must  ex- 
amine them;  therefore  the  teller  does  not  need  to  do  so. 
There  is  an  important  point,  however,  in  connection  with  the 
endorsement  of  checks  deposited,  regarding  which  the  teller 
must  each  time  satisfy  himself  before  accepting  any  deposit. 
The  fact  that  a  certain  check  is  payable  to  a  corporation  is 
direct  evidence  that  the  funds  involved  belong  to  the  corpora- 
tion. Such  funds  must  not  be  diverted  from  the  corporation 
without  proper  authorization  from  its  directors.  The  teller 
must  be  on  guard  to  see  that  no  check  payable  to  a  corpora- 
tion is  deposited  to  the  credit  of  any  unauthorized  account. 
While  the  teller  cannot  examine  the  endorsements  of  every 
check,  he  must  learn  which  to  examine  and  must,  at  a  glance, 
discover  any  irregularities  of  this  nature.  He  must  see  the 
important  facts  regarding  each  deposit. 

When  the  coin  and  currency  and  the  checks  have  been 
removed  from  the  counter  to  the  teller's  desk,  the  total  of  the 
deposit  tag  is  entered  in  the  pass  book,  after  which  the  tag  is 
placed  on  the  teller's  desk,  face  down,  one  pile  being  made  for 
deposit  tags  and  one  for  checks. 


38  Modern  Banking  Methods 

Receiving  Tellers'  Assistants 

Assistants  should  be  assigned  to  the  Receiving  tellers  for 
certain  regular  periods  each  day.  The  In-Mail,  Transit  and 
Messenger  departments  can  be  drawn  on  for  this  purpose. 
If  given  no  help  at  all,  the  Receiving  tellers  might  do  their 
own  work  and  complete  it  within  two  or  three  hours  after  the 
bank  closes  but  this  will  delay  the  Out-Clearing,  Transit, 
Messenger,  Interior  Proving  and  Bookkeeping  departments. 
The  daily  routine  should  prevent  the  tellers  from  holding 
checks  and  deposits,  at  any  time,  longer  than  necessary. 
Every  teller's  blotter  should  be  completed  within  half  an  hour 
or,  at  the  outside,  an  hour  after  the  bank  closes.  Late  work 
from  any  one  teller  may  mean  the  delaying  of  half  the  office 
force ;  if  one  teller  holds  up  the  work  of  even  twelve  men  only 
five  minutes,  it  means  an  hour's  loss  of  time  to  the  bank. 
Furthermore,  this  help  enables  the  Receiving  tellers  to  handle 
a  larger  number  of  deposits  and  relieves  them  of  a  class  of 
work  which  can  just  as  effectively  be  done  by  less  experienced 
help.  Incidentally,  junior  clerks  are  given  an  opportunity 
to  qualify  for  the  work  of  Receiving. 

Deposits  Held  Out 

The  teller  must  always,  at  the  moment  a  deposit  is  made, 
place  on  his  pile  of  deposit  tags  either  an  original  tag  or  some 
substitute.  It  is  sometimes  necessary  for  a  teller  to  tempo- 
rarily retain  in  his  possession  a  deposit  tag  in  order  that  the 
credit  may  be  advised  to  the  depositor's  home-office  or  for 
some  other  reason.  For  use  at  such  times  a  "dummy  credit 
tag"  should  be  provided,  printed  on  red  paper  and  reading  as 

follows : — 

Dummy  Credit  Tag 

Original  must  be  substituted  for  this  tag  today. 

Name  of  account  

Date 191.. 

Amount  of  coin  and  currency     -      -      -    $ 

Amount  of  deposit     -      -      -      -      -      -    $ 

Teller. 


The  Receiving  Tellers  39 

The  Write-Up 

Frequently  throughout  the  day,  the  deposit  tags  and  the 
checks  are  removed  from  the  teller's  desk,  to  be  assorted, 
listed  on  the  blotter  sheet,  proved  and  sent  to  the  various 
departments.  Each  set  of  items  so  removed  is  called  a 
"write-up". 

A  "write-up"  should  not  contain  more  than  two  hundred 
and  fifty  checks  nor  more  than  seventy  five  deposit  tags. 
This  is  very  important  because  with  a  larger  number  of  items 
too  much  time  must  be  spent  locating  differences. 

The  total  of  checks  plus  the  coin  and  currency  called  for 
by  the  deposit  tags  must  equal  the  total  of  the  deposit  tags. 
When  he  "breaks  off"  the  "write-up",  the  teller's  assistant 
must  make  sure  that  the  check  last  placed  in  the  one  pile  is 
the  last  item  called  for  by  the  last  deposit  tag  in  the  other 
pile.  A  deposit  tag  without  the  relative  checks  or  a  check 
without  the  relative  deposit  tag  will  cause  the  "write-up" 
to  be  out  of  balance. 

Assorting 

The  checks  for  each  "write-up"  are  assorted  into  the 
divisions :  "General  Ledger",  "Transit  Account",  "City  Cash 
Collections",  "Individual  Checks"  and  either  "A.M.  Clearing" 
or  "P.M.  Clearing".  Each  teller  has  a  pad  of  labels,  one  of 
which  is  placed  on  the  pile  of  deposit  tags  and  one  on  each 
pile  of  checks.  These  labels  are  headed  with  the  names  of 
the  different  divisions;  they  state  to  which  department  the 
checks  listed  are  to  be  delivered  and  show  with  which  teller 
and  on  which  sheet  the  checks  originated.  A  rubber  band 
is  placed  around  the  deposit  tags  and  one  around  each  bunch 
of  checks,  after  which  they  are  ready  for  listing. 

Receiving  Teller's  Blotter 

The  blotter  sheets  are  divided  into  six  columns.  The 
numerals  "1"  to  "100",  in  small  type,  are  printed  in  red  ink 
between  these  columns  in  vertical  succession,  one-sixth  of 
an  inch  apart  to  correspond  with  the  adding  machine  spacing. 

Using  these  numerals  the  messengers  or  the  bell  boys 
can  readily  obtain  a  count  each  day  of  the  number  of  checks 
handled,  information  necessary  to  the  intelligent  operation 


40  Modern  Banking  Methods 

of  the  Analysis  department.  The  numerals  at  the  same  time 
serve  every  purpose  of  ruled  lines.  The  printing  is  in  red 
ink,  so  as  not  to  interfere  with  any  ink  or  adding  machine 
records  which  may  be  written  over  the  printed  matter  on  the 
sheet. 

In  addition  to  these  vertical  lines  of  numbers,  a  red  line 
is  ruled  horizontally  across  the  blotter  sheets,  2%  inches 
above  the  lower  end  of  each  column.  This  line  rises  above 
the  carriage  of  the  adding  machine  when  there  is  room  in  the 
column  for  only  two  or  three  more  checks  and  serves  as  a 
useful  warning  to  the  clerk  listing  the  checks. 

Printed  headings  in  the  various  columns  are  useful: 
"Deposits"  in  the  first  column,  "Coin  and  Currency"  in  the 
first  portion  and  "City  Cash  Collections"  in  the  lower  portion 
of  the  second  column,  "General  Ledger  Checks"  in  the  first 
portion  and  "Individual  Checks"  in  the  lower  portion  of  the 
third  column,  "Transit  Account"  in  the  fourth  column  and 
"Clearing"  in  the  fifth  and  sixth  columns. 

Listing 

Deposits  are  listed  and  totaled  in  the  first  column  of  the 
blotter. 

Both  counters  of  the  adding  machine  are  then  cleared, 
after  which  the  coin  and  currency*  and  each  of  the  various 
bunches  of  checks  are  listed  in  the  remaining  columns.  A 
transfer  total  is  printed  at  the  end  of  each  of  these  lists,  with 
a  grand  total  in  the  lower  part  of  the  first  column.  This 
grand  total  should  equal  the  total  of  the  deposit  list. 

If  the  amounts  agree,  the  "write-up"  is  "in  balance"  and 
the  checks  and  deposit  tags  are  placed  in  a  tray  outside  of 
the  cage,  ready  for  delivery  by  the  bell-boys  to  the  depart- 
ments indicated  on  the  labels.  The  one  listing  of  these 
checks  and  deposits  has  been  sufficient.  It  is  not  necessary 
for  any  one  to  re-write  any  of  the  items  or  to  call  them 
back  to  the  lists.  The  lists  are  correct,  and  require  no  further 
proof. 

If  the  amounts  do  not  agree  and  the  total  of  the  coin 
and  currency  plus  the  checks  is  not  equal  to  the  total  of 

*The   amounts   of   coin  and  currency   are  listed  from   the   deposit   tags. 


The  Receiving  Tellers  41 

the  deposit  list,  it  is  necessary  for  the  difference  between  the 
totals  to  be  located  and  the  error  corrected  before  the  checks 
and  deposit  tags  are  sent  out.  The  items  on  the  various 
blotter  lists  are  in  the  same  order  as  on  the  deposit  tags  and 
a  complete  "check-off"  from  the  tags  to  the  lists  should  not 
take  more  than  fifteen  minutes.  If  it  becomes  necessary  also 
to  test  the  footings  of  the  tags,  more  time  may  be  required. 
For  a  majority  of  the  "write-ups",  there  should  be  no  dif- 
ferences. On  very  busy  days  or  when  the  number  of  differ- 
ences is  larger  than  usual,  there  should  be  some  one  available 
to  assist  in  the  work  of  locating  differences  and  possibly  in 
that  of  assorting  the  checks  so  that  the  regular  assistant  may 
be  able  to  spend  his  entire  time  at  the  adding  machine. 

Missorts 

The  fact  that  a  bunch  of  checks  is  received  by  the  Transit 
department  bearing  a  label  which  states  that  the  items  have 
been  charged  to  Transit  Account  on  the  blotter  of  Receiving 
teller  No.  2,  on  sheet  No.  5,  may  be  accepted  by  any  depart- 
ment as  sufficient  evidence  that  the  checks  have  been  so 
charged.  Immediately  upon  receipt,  the  Transit  department 
assorts  and  endorses  the  checks  preliminary  to  writing  the 
out-going  cash  letters.  In  assorting  the  checks,  they  find  one 
for  say  $15.25  which  should  have  been  charged  by  the  teller 
to  P.  M.  Clearing.  To  this  check  they  pin  the  label  which 
was  received  with  it  and  on  the  label  they  write  "off  Transit". 

Experience  has  shown  that  it  is  worth  while  for  each 
department  to  keep  a  temporary  record  of  any  mis-sorted 
checks  which  it  may  return  to  the  tellers  for  switching,  be- 
cause differences  are  sometimes  caused  through  an  error  in 
the  teller's  blotter,  such  a  check  being  deducted  from  or 
added  to  the  wrong  total.  To  make  easy  the  locating  of  such 
errors,  all  changes  on  the  blotters  should  be  made  with  pen 
and  ink  and  not  by  use  of  the  adding  machine. 

The  $15.25  check,  together  with  the  label  marked  "off 
Transit",  is  returned  to  Receiving  teller  No.  2.  His  assistant 
has  made  another  write-up  since  the  items  listed  on  Sheet 
No.  5  were  sent  out  and  has  carried  forward  the  totals  from 
the  previous  sheet.  He  is  now  listing  checks  on  Sheet  No. 
7.  Because  the  totals  have  been  carried  forward,  he  must 


42  Modern  Banking  Methods 

finish  listing  and  totaling  the  items  on  this  sheet  before 
making  the  switch. 

Sundry  loose  papers  should  not  be  allowed  to  gather  at 
the  teller's  desk.  There  is  greater  probability  of  accuracy 
if  switches  are  made  one  at  a  time  than  when  there  are  several 
checks  to  be  switched  at  the  same  time  in  different  directions. 
The  various  departments  should  not  be  obliged  to  wait  for 
additional  checks  after  the  last  write-up  of  the  day  has  been 
sent  out.  For  these  reasons,  no  matters  how  far  behind 
time  the  work  may  be,  all  switches  then  in  hand  should  be 
made  each  time  before  a  new  write-up  is  started. 

The  teller  or  his  assistant  will  locate  the  amount  $15.25 
in  the  Transit  Account  list  on  Sheet  5  and  through  it  draw  a 
line  followed  by  one  of  the  words  "out"  or  "off".  He  will 
then  subtract  $15.25  from  the  latest  total,  the  one  on  Sheet 
7,  writing  after  the  amount  subtracted  the  same  word.  He 
will  then  list  the  amount  with  pen  and  ink  after  the  Clearing 
total  on  Sheet  7,  draw  a  footing  line  and  under  it  write  the 
new  total.  The  item  is  then  given  a  new  label  and  sent  to  the 
Clearing  House  department. 

This  procedure  is  followed  with  all  missorted  checks. 

Large  Deposits 

In  the  larger  banks,  there  are  a  few  depositors  who 
deposit  a  large  number  of  Clearing  House  checks  every  morn- 
ing just  before  closing  time  for  the  clearing.  One  listing  of 
these  checks  can  be  saved.  These  depositors  should  be  in- 
duced to  enter  such  checks  on  deposit  tags  separate  from  the 
ones  on  which  their  other  items  are  entered.  Failing  this, 
they  may  be  willing  to  make  up  each  deposit  with  the  Clear- 
ing entered  first  and  its  total  carried  forward  or  they  can  be 
given  deposit  tags  with  two  columns,  one  for  clearing  and  one 
for  other  checks. 

Instead  of  first  listing  this  clearing  on  the  tellers' 
blotters  as  is  done  with  other  clearing,  it  can  be  assorted 
direct  to  the  banks  on  which  the  checks  are  drawn  and  listed 
on  sheets  in  triplicate,  with  carbon,  this  listing  to  be  done 
either  by  a  Receiving  teller's  assistant  or  by  a  member  of 
the  Out-Clearing  department.  The  sheets  should  be  of  the 


The  Receiving  Tellers  43 

same  size  as  the  tellers'  blotter  sheets.  The  original  must  be 
filed  by  the  teller  as  a  portion  of  his  blotter,  the  duplicate 
is  filed  by  the  Out-Clearing  department  as  a  portion  of  their 
record  and  the  triplicate  is  torn  into  strips  and  sent  with  the 
checks  to  the  various  banks. 

The  Receiving  teller's  assistant,  in  listing  the  various 
items  to  prove  the  write-up  containing  these  deposits,  will 
carry  into  his  proof  the  total  of  this  special  out-clearing  sheet 
or,  if  preferred,  can  list  as  "A.M.  Clearing"  the  clearing  sub- 
totals shown  on  the  deposit  tags,  comparing  the  amount  so 
obtained  with  the  total  of  the  special  out-clearing  sheet. 

Still  further  time  can  be  saved  if  the  depositors  whose 
checks  are  to  be  handled  in  this  manner  are  provided  with 
combination  endorsement  stamps  by  which  they  place  the 
bank's  Clearing  House  endorsement  on  their  checks  at  the 
same  time  that  they  make  their  own  endorsement. 

Coin  and  Currency  to  Vault 

Each  teller  records  in  the  recapitulation  of  his  blotter 
after  the  heading  "Coin  and  Currency  to  Vault"  the  exact 
total  of  coin  and  currency  sent  to  Vault.  The  Receiving 
teller's  blotter  shows  that  he  received  during  the  day 
$350,000,  of  which  $300,000  was  in  checks  and  $50,000  in  coin 
and  currency.  His  count  of  the  latter  shows  only  $49,999.90. 
The  recapitulation  of  his  blotter  reads  as  follows : 

Recapitulation  of  Receiving  Teller's  Blotter 

Dr.  Cr. 

Credit  Accounts  as  Follows:  Debit  Accounts  as  Follows: 

General  Ledger  General  Ledger 

Deposits    $  25,000.00  Checks    $  10,000.00 

City   Cash    Collections         1,000.00 
Transit  Account  -      -        54,000.00 


Total  General  Ledger  Total  General  Ledger 

Deposits    $  25,000.00  Debits     $  65,000.00 

Individual  Deposits     -      325,00000  Individual  Checks       -        60,000.00 


Total  Deposits         -    $350,00000               Total  Checks  Paid  -  $125,000.00 

A.  M.  Clearing    -      -  75,000.00 

P.  M.  Clearing    -      -  100,000.00 
Coin  and  Currency 

to  Vault  49,999.90 

Short  Cash    -      -      -  .10 


$350,000.00  $350,000.00 


CHAPTER  IX 


ADDING  MACHINE  RULES 


At  this  point,  the  following  set  of  adding  machine  rules 
may  be  of  interest: 

On  all  records  the  following  rules  must  be  observed: 

A  star  (*)  must  be  printed  at  the  beginning  of  each  and 
every  list. 

The  handle  of  the  adding  machine  must  never  be  moved 
while  the  carriage  of  the  machine  is  thrown  back.  Every 
stroke  of  the  machine  must  be  given  opportunity  to  show 
on  the  record,  whether  the  operation  is  one  of  clearing  the 
machine,  of  spacing,  of  subtracting  an  incorrect  amount,  of 
subtotaling  or  for  any  other  purpose. 

Each  item  listed  must  represent  one  individual  amount. 

When  an  incorrect  amount  has  been  listed  and  the  error 
is  immediately  discovered,  the  simplest  method  of  correction 
is  to  list  and  add  with  the  machine  the  complement  of  the 
incorrect  amount  and  then  proceed  by  adding  the  correct 
amount  as  if  no  previous  entries  had  been  made. 

All  other  changes  must  be  made  with  pen  and  ink. 

In  altering  an  amount,  a  line  must  be  drawn  through  the 
original  figures  and  the  new  figures  placed  to  the  left  of  the 
column. 

Each  blotter  sheet  must  bear  the  signature  of  the  party 
writing  out  the  lists. 


CHAPTER  X 


THE  IN-MAIL  TELLERS 

Transfers  of  Funds 

The  largest  part  of  every  bank's  profits  comes  from  the 
interest  received  for  loans  4>ut  the  largest  part  of  the  labor 
performed  is  in  the  transfer  of  credits  from  one  party  to 
another  and  from  one  city  to  another. 

A  merchant,  in  making  payment  for  goods  shipped  to 
him  from  another  city,  may  re-imburse  the  shipper  in  one  of 
several  ways.  He  may  return,  in  direct  payment,  other  goods 
of  equal  value.  He  may  make  payment  in  coin  or  currency 
by  express.  He  may  give  the  funds  to  a  bank  or  to  some  other 
third  party,  for  remittance  to  the  shipper.  He  may  purchase 
a  bank  draft  and  send  it  to  the  shipper.  He  may  send  his 
own  check  on  his  local  bank.  He  may  pay  a  draft,  issued 
by  the  shipper  against  him,  for  the  amount  due.  Nearly  all 
of  these  transactions  call  for  some  activity  on  the  part  of  one 
or  more  banks.  Instructing  the  bank  to  remit  to  the  shipper, 
is  a  common  practice  in  some  foreign  cities  but  one  very  little 
followed  in  the  United  States.  The  practice  of  purchasing  a 
bank  draft  on  some  Reserve  or  Central  Reserve  point,  to  be 
forwarded  to  the  shipper,  is  quite  common. 

Collecting  the  Draft  or  Check 

Having  received  the  bank  draft  or  the  merchant's  check, 
the  shipper  may  choose  one  of  several  methods  by  which  to 
obtain  the  actual  funds  due  him.  The  draft  or  check  is  not 
money;  it  is  merely  an  order  to  pay  money.  He  may  bring 
this  order  to  the  Collection  teller  of  his  local  bank,  not  obtain- 
ing payment  until  after  the  check  has  been  forwarded  to  the 
drawee  bank  and  charged  to  the  drawer's  account.  He  may 


46  Modern  Banking  Methods 

immediately  obtain  coin  or  currency  for  the  check  from  the  Paying 
teller  of  his  local  bank  or  he  may  deposit  it  to  his  credit  through 
the  Receiving  teller.  He  may  give  the  check  to  the  Note 
teller  of  his  local  bank  in  payment  for  a  loan.  He  may  en- 
dorse the  check  to  some  other  individual,  who  in  turn  will 
collect  it  by  one  of  these  methods. 

Transit  Department 

Any  teller  other  than  the  Collection  teller  handling  an 
out-of-town  check  charges  it  to  Transit  Account. 

These  checks  or  "cash  items"  are  listed  by  the  Transit 
department  on  "cash  letters",  the  carbon  copies  of  which 
constitute  an  important  portion  of  the  Transit  department's 
records.  Some  of  the  cash  letters  are  sent  "for  credit"  and 
the  remainder  "for  collection  and  returns"  or  "for  remit- 
tance", different  forms  being  used  for  these  different  pur- 
poses. 

In-Mail  Teller 

The  cash  letters,  when  received  by  the  banks  to  which 
addressed,  are  handled  by  one  of  three  departments :  the 
Receiving,  the  Exchange  or  the  In-Mail.  In  banks  which 
have  only  a  small  mail,  the  cash  letters  "for  credit"  are 
usually  handled  by  the  Receiving  teller  and  the  cash  letters 
"for  remittance"  by  the  Exchange  teller.  As  the  mail  increases 
in  volume,  an  In-Mail  department  becomes  necessary,  first, 
for  the  relief  of  the  Receiving  tellers  and,  later,  to  relieve  the 
Exchange  tellers. 

The  work  of  the  In-Mail  tellers  is  somewhat  similar  to 
that  of  the  Receiving  tellers,  both  accept  checks  for  the 
credit  of  depositors;  there  are,  however,  some  important 
variations. 

Incoming  Letters 

The  Receiving  teller  must  check  the  listing  of  certain  items 
on  the  deposit  tags;  so,  also,  the  In-Mail  teller  must  check  the 
listing  of  certain  items  on  the  incoming  cash  letters.  On  cash 
letters,  special  instructions  for  the  handling  of  the  items  must, 
also,  be  noted. 


The  In-Mail  Tellers  47 

No  In-Mail  Coin 

In  order  that  differences  in  the  cash  shall  be  localized  and 
an  individual  rather  than  a  department  made  responsible  for 
each  difference,  each  Receiving-  teller  balances  by  himself,  inde- 
pendent of  all  other  tellers.  The  In-Mail  tellers  handle  no  coin 
or  currency,  except  possibly  an  occasional  torn  or  mutilated  bill 
enclosed  with  a  cash  letter  for  redemption.  There  is  therefore 
no  reason  for  the  In-Mail  tellers  to  have  any  unlocated  differ- 
ences and  no  need  for  them  to  make  up  more  than  one  blotter. 

In-Mail  City  Cash  Collections 

The  Receiving  tellers  have  occasion  to  accept  on  deposit 
very  few  drafts  on  firms  in  their  own  city.  The  In-Mail  tellers 
receive  a  great  many,  in  addition  to  checks  on  saving  banks  and 
to  coupons,  all  of  which  must  be  collected  and  accounted  for  on 
the  day  deposited. 

In  some  banks,  the  In-Mail  teller  lists  on  his  blotter  as  a 
final  record — not  the  original  items  but  the  checks  or  coin  re- 
ceived in  payment  for  them.  To  simplify  the  records,  the  drafts 
themselves  should  be  listed  on  the  blotters  and  not  the  funds  re- 
ceived in  payment.  The  lists  should  be  headed  "City  Cash  Col- 
lections", followed  by  the  sub-heading  "Drafts".  No  further 
record  of  the  items  need  be  made  by  the  In-Mail  teller. 

Other  sub-divisions  of  City  Cash  Collections,  such  as  "Drafts 

on Railway  Company"  and  "Coupons",  may  be 

useful. 

Messengers'  Records 

Each  messenger  must  have  for  temporary  use  a  memoran- 
dum or  collection  book  of  some  sort  in  which  to  record  the  vari- 
ous items  which  he  takes  out  for  collection. 

The  messengers  record  in  their  collection  books  the  number 
and  amount  of  each  collection  obtained  from  the  Collection  de- 
partment, together  with  the  name  of  the  drawee.  The  fate  of 
each  item  is  recorded  in  the  collection  book  as  soon  as  presenta- 
tion has  been  made.  When  a  check  is  received  in  payment  for  a 
collection,  the  collection  number  is  written  by  the  messenger  in 
pencil  in  the  corner  of  the  check  and  a  memorandum  that  a 
check  was  received  is  made  in  his  collection  book.  When  a  no- 


48  Modern  Banking  Methods 

tice  that  the  bank  holds  the  draft  for  collection  is  left  with  the 
drawee  or  when  payment  is  refused,  the  facts  are  written  by  the 
messenger  on  the  back  of  the  draft  and  in  his  book. 

Drafts  from  the  In-Mail  teller  are  not  numbered.  Until 
they  reach  the  messengers,  no  record  of  them,  other  than  the 
listing  of  the  amounts  in  the  In-Mail  blotter,  has  been  made.  The 
messengers  record  them — not  in  their  collection  books  but  on 
specially  provided  forms  in  duplicate,  with  carbon,  thereby  mak- 
ing, in  one  operation,  a  permanent  record  of  the  items  for  use 
of  the  Collection  department  and  a  temporary  memorandum  for 
their  own  use. 

The  printed  headings  and  the  ruling  on  the  left-hand  side  of 
both  the  original  and  the  duplicate  forms  should  be  identical. 
They  should  show  the  amount  of  each  draft,  the  firm  or  the  indi- 
vidual drawn  on  and  the  total  for  each  drawee.  The  duplicates, 
to  be  taken  by  the  messengers  on  their  routes,  vary  on  the  right- 
hand  side  from,  the  originals.  They  should  be  on  paper  of  a 
different  color  from  that  of  the  originals  and  should  be  ruled  on 
the  right-hand  side  into  columns  headed:  "Coin  received  in  pay- 
ment", "Check  on  No for  $ received  in  payment", 

"Notice  left"  and  "Memoranda".  The  originals,  to  be  used  by 
the  Collection  department  in  lieu  of  a  collection  register  and  also 
as  deposit  tags  to  the  credit  of  City  Cash  Collections,  should  be 
ruled  on  the  right-hand  side  into  columns  headed  :  "Credit  City 
Cash  Collections",  "Not  yet  paid;  transfer  to  City  Cash  Collec- 
tions numbered  record"  and  "Memoranda".  The  "Credit  City 
Cash  Collections"  column  should  be  subdivided  to  show  "Coin 
received  in  payment",  "Check  on  No for  $ re- 
ceived in  payment"  and  "Unpaid ;  charged  back  to  depositor". 

In  the  morning  before  giving  the  original  to  the  Collection 
department,  the  messengers  should  total  each  sheet  and  make  a 
grand  total.  This  grand  total  should  equal  the  total  of  "Drafts" 
as  shown  by  the  In-Mail  blotter.  In  the  afternoon  after  all  the 
returns  have  been  entered  on  the  originals  by  the  Collection  de- 
partment, this  latter  department  should  make  a  grand  total  of  the 
totals  credited  to  City  Cash  Collections  together  with  the  amounts 
of  the  numbered  records  which  have  been  transferred  from  the 
sheets ;  this  grand  total  must  equal  the  total  of  "Drafts"  on  the 
In-Mail  blotter. 


The  In-Mail  Tellers  49 

Credit  Advices 

The  Receiving  tellers  enter  all  deposits  in  pass  books  or,  in 
the  absence  of  the  pass  books,  issue  duplicate  deposit  tags.  Pass 
books  are  seldom  presented  with  deposits  through  the  mail. 
The  In-Mail  teller  must  therefore  send  credit  advices  to  the  de- 
positors. These  credit  advices  should  show  for  each  incoming 
letter,  the  depositor's  date,  the  date  of  credit  and  the  amount 
credited,  together  with  the  depositor's  collection  number.  All 
cash  items  on  the  bank's  own  city  are,  for  bookkeeping  con- 
venience, credited  to  in-mail  depositors  immediately  upon  receipt. 
If  not  paid  on  the  same  day,  they  are  debited  to  the  depositors' 
accounts  and  either  returned  unpaid  or  entered  for  collection. 
Details  of  these  charged-back  items  must  be  reported  on  the 
credit  advices  so  as  to  show  the  net  amount  credited.  The  ad- 
vices can  be  addressed  with  pen  and  ink  at  the  time  issued  or  by 
addressograph  beforehand. 

Instead  of  writing  credit  advices,  some  banks  mark  the  in- 
coming cash  letters  with  the  word  "paid"  and  the  date  and  return 
them  to  the  depositors.  These  letters  are  a  valuable  portion  of 
the  bank's  records,  however,  and  should  be  retained  by  the  bank. 

Deposit  Lists 

Deposit  tags  from  the  Receiving  tellers  are  uniform  in 
size  and,  as  they  are  seldom  again  referred  to,  it  is  practicable 
for  the  bookkeepers  to  use  them  in  entering  the  amounts  into  the 
various  ledger  accounts.  Deposit  tags  are  always  entered  di- 
rectly into  the  ledgers. 

Cash  letters  received  as  deposits  by  the  In-Mail  tellers  are 
of  all  sizes  and  shapes.  They  are  frequently  referred  to  in  the 
writing  of  credit  advices  and  for  instructions  as  to  drafts  and 
checks  upon  which  payment  has  been  refused.  It  would  seem 
better  not  to  send  these  letters  direct  to  the  bookkeepers  to  be 
used  as  deposit  tags.  They  should  be  placed  in  the  general 
files  with  other  incoming  letters. 

The  dates,  depositors'  numbers  and  totals  of  the  letters  can 
be  entered  on  forms  which  have  three  columns,  in  the  first  of 
which  columns  are  written  the  depositors'  names,  in  the  second, 
after  each  name,  the  depositor's  date  and,  in  the  last,  the  amount. 
The  names  of  the  bank  depositors  can  be  printed  on  these  deposit 


50  Modern  Banking  Methods 

lists.  The  dates,  numbers  and  amounts  can  be  listed  by  use  of 
the  adding  machine.  The  grand  total  of  the  amounts  so  listed 
in  one  day  must,  of  course,  equal  the  total  deposits  for  the  day 
as  shown  on  the  In-Mail  blotter. 

To  verify  all  of  the  work,  the  names  and  amounts  of  the 
credit  advices  are  called  to  the  ledgers  after  the  bookkeepers  have 
entered  the  deposits  in  them  from  the  deposit  lists. 

These  deposit  lists  are  very  convenient  for  reference.  They 
make  it  possible  to  file  incoming  cash  letters  alphabetically  in 
the  general  files.  They  correctly  place  upon  the  In-Mail  de- 
partment the  responsibility  of  furnishing  the  bookkeepers  a 
proved  set  of  deposits.  When  deposit  lists  are  used,  the 
bookkeepers  cannot  be  thrown  out  of  balance  through  cash 
letters  being  misplaced  in  the  process  of  assorting,  advising 
credits,  looking  up  instructions  et  cetera.  The  deposit  lists 
save  the  bookkeepers  the  work  of  listing  on  their  Daily  De- 
posit Proofs  the  individual  amounts,  the  totals  of  the  deposit 
lists  being  used  instead. 

Use  of  Carbon 

The  credit  advices  and  the  deposit  lists  can,  by  use  of  car- 
bon, be  filled  in  with  one  operation.  Several  credit  advice 
slips  should  be  printed  in  one  sheet,  separated  from  each 
other  by  perforations.*  The  printing  on  the  advice  slips  and 
on  the  deposit  lists  should  be  so  adjusted  by  the  printer  that 
the  facts  written  on  the  advice  slips  will  be  automatically 
registered  in  their  proper  place  on  the  deposit  lists  when  the 
forms  are  placed  with  carbon  in  the  adding  machine. 

Cash  Letters  from  Exchange  Banks  and  "for  Remittance" 

Cash  letters  from  all  other  banks  can  be  handled  in 
much  the  same  manner  as  cash  letters  from  depositing  banks. 
For  cash  letters  from  Exchange  banks,  there  must  be  addi- 
tional columns  on  the  deposit  lists  in  which  to  record  the 
amount  of  Domestic  Exchange  and  of  Transit  Exchange  de- 
ducted from  each  letter  and  the  net  credit  to  each  bank.  For 
cash  letters  received  "for  remittance",  the  heading  "Deposit 
List"  should  be  altered  to  read  "Remittance  List"  and  the 


*A   convenient  size  for  the  sheet  is  10  l/i"x2i"  and  for  the  advice  slips  5 1/g" 


The  In-Mail  Tellers  51 

heading  of  the  last  column  changed  from  "Net  Amount 
Credited"  to  "Net  Amount  Remitted".  Either  separate  re- 
mittance lists  or  separate  sections  on  the  same  list  should 
be  used  or  an  additional  column  provided,  to  indicate  on 
which  banks  drafts  are  to  be  drawn.  The  advice  forms  for 
these  cash  letters  are  printed  to  read:  "We  enclose  herewith 

our  draft "  instead  of  "We  have  today  credited  your 

account ".     The  teller  must  deduct  from  the  total  of 

"Individual  Deposits"  on  his  blotter,  the  totals  of  "Domestic 
Exchange"  and  of  "Transit  Exchange"  called  for  by  these 
lists  and  must  carry  these  totals  on  his  blotter  as  separate 
items.  If  it  be  desired,  the  net  total  of  the  "Remittance  List" 
may  also  be  deducted  from' "Individual  Deposits"  and  treated 
as  a  separate  credit  entitled  "In-Mail  Drafts",  to  be  offset  on 
the  General  books  by  a  debit  for  a  like  amount  on  the  Ex- 
change teller's  blotter. 

The  deposit  lists  are  sent  to  the  bookkeepers  and  the  re- 
mittance lists  to  the  Exchange  teller.  The  bookkeepers  enter 
the  amounts  from  the  deposit  lists  in  their  ledgers.  The  Ex- 
change teller  uses  the  remittance  lists  as  applications  for 
exchange;  from  them,  he  issues  drafts  in  payment  for  the 
cash  letters. 

In-Mail  Teller's  Blotter 

With  several  clerks  at  the  same  time  listing  items  on  the 
blotter  sheets  for  In-Mail  "write-ups",  it  is  impracticable  to 
carry  the  totals  forward  from  one  "write-up"  to  another.  A 
new  blotter  sheet  must  be  used  upon  which  to  assemble  the 
various  totals. 

In  the  In-Mail  teller's  blotter,  one  of  the  advantages  of  a 
loose-leaf  blotter  system  is  especially  apparent.  A  small  mail 
or  a  large  mail  can  be  handled  without  waste  of  space  and 
without  crowding.  A  new  summing  up  of  the  blotter  sheets 
can  be  made  after  each  incoming  mail.  With  late  mails  that 
are  so  small  as  to  require  only  one  write-up  each,  the  totals 
from  the  last  previous  blotter  sheet  can  be  carried  directly 
forward  in  making  each  write-up. 

The  final  totals  on  the  In-Mail  teller's  blotter  appear 
about  as  follows: 


52 


Modern  Banking  Methods 


Recapitulation  of  In-Mail  Tellers'  Blotter 


Dr. 
Credit  accounts  as  follows: 

Domestic    Exchange        -    $ 
Transit  Exchange     - 


Cr. 


Debit  accounts  as  follows: 

2Q    General  Ledger  Checks      -    $  10,000 

10    Transit  Account      -  -      -      300,000 

City  Cash  Collections     -      -        50,000 


Total  Deposits 
In-Mail  Drafts    - 


-    $740,000        Total  Checks  paid 
A.M.  Clearing  - 


10,000 


Coin  and  Currency  to  Vault 


Total  General  Ledger    -    $         30        Total  General  Ledger       -    $360,000 
Individual  Deposits    -      -      739,970    Individual  Checks   -      -      -      140,000 


-  -    $500,000 

-  -      249,990 


10 


$750,000 

• 


$750,000 


CHAPTER  XI 


EXCHANGE 


Transfers  Through  In-Mail  and  Transit  Departments 

Cash  letters  do  not  merely  come  from  the  Post  Office  to 
be  mechanically  recorded  on  meaningless  forms  opposite  lists 
of  impersonal  names.  Each  letter  is  part  of  the  process  of 
transferring  funds  from  city  to  city.  Each  check  represents 
a  previous  transfer  of  values.  Some  checks  disclose  the  facts 
more  readily  than  others.  A  check  for  $1000  drawn  by  Burke 
Automobile  Repair  Company  on  the  Merchants  National  Bank 
of  Los  Angeles,  payable  to  Jones  Brothers  and  endorsed  by 
them  and  by  The  First  National  Bank  of  Chicago,  would  seem 
to  indicate  a  shipment  of  automobile  supplies  from  Chicago 
to  Los  Angeles. 

To  collect  the  check,  The  First  National  Bank  of  Chicago 
will  possibly  send  it  to  The  First  National  Bank  of 
San  Francisco,  for  credit.  It  will  be  handled  in  The 
First  National  Bank  of  Chicago  by  the  Receiving  tel- 
ler, a  "striker"  and  the  Transit  department  and  in  The 
First  National  Bank  of  San  Francisco  by  the  In- 
Mail  teller  and  the  Transit  department.  From  San  Francisco, 
it  will  perhaps  be  sent  to  The  First  National  Bank  of  Los 
Angeles,  where  it  will  be  handled  by  their  In-Mail  teller  and 
Out-Clearing  department;  from  this  bank,  it  will  be  delivered 
through  the  Clearing  House  to  the  Clearing  House  teller  of 
the  bank  on  which  drawn,  to  be  by  him  sent  via  the  Paying 
teller  and  the  Interior  Proving  department  to  the  bookkeep- 
ers, to  be  entered  in  the  ledger  as  a  charge  against  the  ac- 
count of  the  Burke  Automobile  Repair  Company.  The  effect 
of  the  entire  transaction  is,  in  a  general  way,  the  same  as 
though  the  Burke  Automobile  Repair  Company  had  given 
$1000  in  coin  or  currency  to  the  Merchants  National  Bank  of 


54  Modern  Banking  Methods 

Los  Angeles  in  payment  for  their  draft  on  the  National  City 
Bank  of  Chicago,  to  be  cashed  in  Chicago  by  Jones  Brothers. 
Whether  the  transfer  from  Burke  to  Jones  is  made  by 
bank  draft  or  by  local  check,  the  Los  Angeles  bank  must, 
sooner  or  later,  send  $1000  in  some  form  to  Chicago  or  to  San 
Francisco  with  which  to  make  the  payment;  if  to  San  Fran- 
cisco, then  the  San  Francisco  bank  must  forward  $1000  to 
Chicago. 

Exchange 

At  the  time  this  transfer  is  being  made,  another  Los  An- 
geles firm  receives  two  Chicago  checks,  totaling  $1000,  in  pay- 
ment for  shipments  of  fruit  to  Chicago.  These  checks,  de- 
posited in  The  First  National  Bank  of  Los  Angeles,  are  for- 
warded by  them  to  San  Francisco  or  to  Chicago,  for  credit, 
and,  without  the  use  of  coin  or  currency,  entirely  liquidate  the 
debt  created  by  the  Burke  Automobile  Repair  Company's  check. 

The  total  of  the  outgoing  cash  letter  to  any  bank  is  sel- 
dom the  same  amount  as  the  total  of  the  incoming  cash  letter 
for  the  day  from  the  same  bank.  The  difference  in  amounts 
causes  a  like  difference  in  the  balance  of  the  current  account 
carried  between  the  two  banks.  The  size  of  this  balance  is 
also  influenced  by  other  transactions  such  as  telegraphic  trans- 
fers, collections,  transfers  ordered  between  correspondent 
banks,  drafts  issued,  etc.  Balances  cannot  be  allowed  to  in- 
crease indefinitely  or  to  decrease  indefinitely  and  occasional 
shipments  of  coin  or  currency  must  be  made  in  adjustment. 
The  majority  of  exchange  transactions  through  the  banks 
represent  a  previous  exchange  of  commodities  between  mer- 
chants. Final  settlement  is  made  in  coin  or  currency. 

Exchange  Costs 

In  cities  containing  more  than  one  bank,  each  bank  is 
not  always  obliged  to  ship  coin  or  currency  in  order  to  ob- 
tain exchange.  All  do  not  have  the  same  transactions.  One 
may  have  credit  balances  in  Exchange  banks  larger  than  are 
at  the  moment  needed.  For  a  slight  premium  this  bank  may 
issue  drafts  against  this  excess  exchange,  payable  to  other 
banks.  The  rate  of  premium  is  regulated  by  the  law  of  sup- 
ply and  demand.  Coin  or  currency  is  shipped  to  provide  ex- 


Exchange  55 

change  only  when  this  premium  reaches  a  point  higher  than 
the  shipping  cost.  The  express  cost  for  shipping  gold  from 
San  Francisco  to  Chicago  is  $1.50  for  each  $1000  shipped. 
The  cost  for  currency  is  less.  The  rate  of  premium  for  Chi- 
cago or  New  York  exchange  in  San  Francisco  is  therefore 
never  in  excess  of  $1.50  per  $1000. 

It  is  a  practice  in  San  Francisco  when  crediting  the  ac- 
counts of  interior  banks  for  large  checks  on  New  York,  Chi- 
cago or  St.  Louis,  to  add  a  premium  at  the  current  rate  for 
New  York  exchange.  A  premium  slightly  in  excess  of  the 
current  exchange  rate  is  charged  for  cash  letters  received 
from  Eastern  banks  or  sometimes  a  flat  rate  the  year  around. 
Premiums  paid  are  debited  to  "Domestic  Exchange"  or  to  a 
General  Ledger  account  bearing  some  similar  name  and 
premiums  coljected  are  credited  to  this  account.  Similar 
conditions  exist  in  other  cities  although  the  rate  of  exchange 
charge  to  depositors  is  often  regulated  by  Clearing  House 
agreement. 

A  separate  account,  entitled  "Transit  Exchange",  is  very 
useful  for  keeping  track  of  exchange  charged  by  other  banks 
on  cash  letters  sent  through  the  Transit  department.  Amounts 
collected  from  depositors  to  cover  these  charges  are  credited  to 
"Transit  Exchange". 

It  is  interesting  to  trace  the  bookkeeping  entries  occa- 
sioned by  exchange  charges  on  Burke  Automobile  Repair 
Company's  $1000  check  in  its  course  through  the  various 
banks. 

The  check  was  credited  to  the  depositor  in  Chicago,  listed 
on  a  teller's  blotter  to  Transit  Account,  carried  by  the  Transit 
department  among  the  outstanding  items  and,  finally,  debited 
to  the  collecting  bank  and  credited  to  Transit  Account.  Simi- 
lar entries  were  made  in  San  Francisco.  The  Los  Angeles 
bank  credited  the  check  to  San  Francisco  as  soon  as  received 
and  collected  it  from  the  drawee  bank  through  the  Clearing 
House. 

To  complete  the  transaction  and  explain  the  exchange 
charges,  let  us  assume  that  the  Los  Angeles  bank  found  it 
necessary,  because  of  this  and  other  transactions,  to  pur- 
chase $50,000  of  San  Francisco  exchange  and  the  San  Fran- 


56  Modern  Banking  Methods 

cisco  bank  to  purchase  $100,000  of  Chicago  exchange.  The 
books  of  the  various  banks  should  contain  exchange  entries 
about  as  follows : 

In  Los  Angeles: 

Debit  Domestic  Exchange  not  to  exceed  $37.50  for 
premium  on  the  $50,000  San  Francisco  exchange. 
This  is  the  cost  for  shipping  coin  by  express ; 
the  exchange  cost  cannot  be  higher. 

Credit  Cashier's  Checks  the  same  amount.  This 
premium  is  paid  by  means  of  a  Cashier's  Check 
to  the  bank  from  which  the  $50,000  exchange  is 
purchased. 

Debit  the  bank  in  San  Francisco  $i.  Los  Angeles 
banks  charge  San  Francisco  banks  exchange  at 
the  rate  of  $1  per  $1000  for  all  checks  bearing 
Eastern  endorsements.  This  is  under  Clearing 
House  agreement. 

Credit  Domestic  Exchange  the  same  amount.  If  fe& 
the  amount  debited  Domestic  Exchange  were  at 
the  maximum  rate  of  75c  per  $1000,  this  would 
represent  a  profit  of  25c  to  the  Los  Angeles 
bank;  the  actual  profit  is  greater. 

In  San  Francisco: 

Credit  the  bank  in  Los  Angeles  $i  to  cover  the 
amount  charged  by  it. 

Debit  Transit  Exchange  this  amount  for  bookkeeping 
convenience. 

Debit  Domestic  Exchange  $40  for  premium  on  the 
$100,000  Chicago  exchange  purchased. 

Credit  Cashier's  checks  this  amount.  The  Cashier's 
check  is  paid  to  the  bank  from  which  the  ex- 
change is  purchased. 

Debit  the  bank  in  Chicago  $1.40  to  cover  the  cost 
of  exchange  on  the  $1,000  check. 

Credit  Transit  Exchange  $1.00  of  this  amount. 

Credit  Domestic  Exchange  the  remaining  400. 
In  Chicago: 

Credit  the  bank  in  San  Francisco  $1.40  to  cover  the 
amount  charged  by  it. 

Debit  Transit  Exchange  this  amount  until  it  is  con- 
venient to  collect  it  from  the  depositor. 

Debit  the  depositor  $1.40  either  when  the  check  is 
paid,  when  it  is  deposited  or  at  the  end  of  the 
month. 

Credit  Transit  Exchange  a  like  amount. 


Exchange  57 

Exchange  Statistics 

Information  or  statistics  should  be  available  to  the  Ex- 
change teller,  to  the  officers,  to  the  Analysis  department  and 
to  the  Advertising  or  Business-Getting  department  (if  there 
is  one),  showing  the  total  amount  of  incoming  cash  letters 
from  each  depositor  and  from  each  locality,  the  time  of  year 
different  quantities  are  received  from  different  localities,  the 
proportions  of  local  and  out-of-town  items  and  the  nature  of 
the  out-of-town  items.  This  information  may  be  gathered 
by  the  Exchange,  by  the  In-Mail  or  by  the  Analysis  department. 
Similar  information  should  be  available  from  the  records  of 
the  Transit  department,  showing  the  amount  of  outgoing 
cash  letters  sent  to  each  bank  and  to  each  locality,  the 
sources  from  which  the  items  are  received  and  the  proportions 
between  items  received  over  the  counter  and  items  received 
by  mail. 

In  the  smaller  banks,  no  attempt  is  made  to  tabulate  this 
information.  Incoming  cash  letters  from  Exchange  banks 
and  outgoing  cash  letters  to  Exchange  banks  are  handled 
through  the  Exchange  teller's  blotter  because  the  Exchange 
teller  needs  the  information  which  he  may  glean  from  them. 
Incoming  cash  letters  from  local  banks  are  handled  by  the 
Receiving  tellers,  who  are  looked  to  for  any  desired  informa- 
tion regarding  deposits.  Outgoing  cash  letters  to  other  than 
Exchange  banks  are  handled  by  the  Collection  teller.  Work 
is  assigned  to  a  department  with  more  regard  to  the  informa- 
tion needed  for  the  intelligent  handling  of  the  departmenl 
than  to  economy  in  handling  the  items. 

Exchange  Work  of  Transit,  In-Mail  and 

Exchange  Departments 

The  officers,  responsible  for  all  phases  of  the  bank's 
activity,  usually  retain  more  or  less  control  over  exchange 
operations.  To  obtain  the  privilege  of  issuing  drafts  against 
banks  in  certain  cities,  they  open  accounts  with  them,  arrange 
for  payment  of  interest  on  balances  and  for  exchange  on  cash 
letters  and  collections  and,  possibly,  for  rediscount  facilities. 
For  the  intelligent  handling  of  these  negotiations,  statistics 
from  the  Transit  department  should  be  available,  to  show 


58  Modern  Banking  Methods 

what  items  can  be  forwarded  to  each  new  bank  connection. 
The  Exchange  teller  should  advise  with  which  banks  accounts 
can  be  opened  to  best  advantage.  The  Transit  manager  is 
sometimes  interested  in  opening  new  accounts,  to  obtain  im- 
proved conditions  as  to  Transit  Exchange,  but  when  there  are 
sufficient  Transit  items  on  a  city  to  warrant  an  account  being 
opened,  there  is  apt  to  be  a  similar  demand  for  drafts  on  the 
same  city. 

The  Exchange  teller  must  watch  the  balances  of  all  Ex- 
change bank  accounts,  must  order  transfers  from  one  Ex- 
change bank  to  another  and  must,  at  all  times,  be  sure  he  has 
on  deposit  balances  sufficient  to  cover  all  drafts  issued  or 
transfers  ordered.  He  must  purchase  exchange  from  other 
banks  when  the  premium  is  low  and  sell  it  when  the  premium 
is  high.  He  must  learn  the  exchange  needs  of  the  community 
and  see  that  his  bank  is  equipped  to  fill  them. 

The  Transit  manager  must  know  that  every  bank  to  which 
he  sends  cash  letters  is  solvent;  he  must  send  letters  by  the 
most  direct  routes  possible;  he  must  see  that  all  items  are 
promptly  remitted  for;  within  these  restrictions,  he  must  keep 
the  Transit  exchange  cost  as  low  as  possible. 

The  In-Mail  tellers'  functions  are  almost  entirely  routine.  Ex- 
perience and  good  judgment  are  needed,  however,  in  carrying  out 
the  depositors'  instructions  and  in  deciding  which  items  may 
be  immediately  credited  and  which  shall  be  entered  for  col- 
lection or  returned.  Checks  for  collection  should,  as  a  rule, 
travel  in  only  one  direction.  The  In-Mail  tellers  must  be  on 
guard  against  accepting  for  credit  from  any  out-of-town  de- 
positor checks  drawn  on  banks  in  the  depositor's  own  vi- 
cinity, because  such  checks  are  open  to  the  suspicion  that  the 
funds  were  not  on  deposit  when  the  checks  were  drawn  and 
that  an  attempt  is  being  made  to  gain  time  by  this  round- 
about method  of  collection.  The  bank's  prestige  among  its 
mail  depositors  depends  largely  upon  the  care,  accuracy,  neat- 
ness and  general  intelligence  of  the  clerks  in  the  In-Mail  de- 
partment. 

The  operations  of  these  three  departments  are  interwoven 
but  each  department  has  its  separate  and  distinct  functions. 
The  In-Mail  teller  handles  incoming  cash  letters  and  the 


Exchange  59 

Transit  department  out-going  cash  letters.  The  Exchange 
teller  is  concerned  with  the  general  features  of  exchange 
activity  and  should  not  be  hampered  with  these  details. 

Cash  Letters  from  Exchange  Banks 

Cash  letters  from  Exchange  banks  and  cash  letters  "for 
remittance"  are  sometimes  assigned  to  the  Exchange  depart- 
ment for  handling  as  a  matter  of  convenience  in  adjusting  the 
work  of  the  various  clerks  and  tellers.  The  relative  volume 
of  work  in  the  Exchange  department  and  in  the  In-Mail  de- 
partment is  made  the  controlling  factor  and  the  work  assigned 
to  the  department  in  which  the  clerks  are  least  busy.  If  the 
work  is  given  to  the  Exchange  tellers  solely  because  they 
would  otherwise  be  idle  each  day  until  9:30  a.m.,  no  incon- 
venience need  be  caused  by  assigning  the  work  to  the  In- 
Mail  department  and  requiring  the  Exchange  tellers  to  assist 
the  In-Mail  department  each  morning  until  9:30  a.m.  To  the 
extent  that  the  work  is  identical,  it  should  be  accomplished 
more  efficiently  by  one  department  than  by  two.  As  far  as 
possible,  the  work  should  always  be  assigned  to  the  depart- 
ment in  which  it  logically  belongs  and  the  amount  of  help  in 
each  department  adjusted  to  meet  its  requirements. 

The  Exchange  teller  should  keep  in  personal  touch  with 
all  the  main  transactions  relating  to  Exchange  banks  but  it 
hardly  seems  necessary  for  him  to  attend  to  the  details  of 
handling  cash  letters  from  and  to  them.  Letters  from  all 
banks  can  be  handled  by  the  In-Mail  teller  and  all  desirable 
information  given  by  him  to  the  Exchange  teller.  To  the 
Exchange  teller  can  be  submitted  for  inspection  all  checks 
over  a  certain  size  as  well  as  the  daily  "deposit  lists"  and  "re- 
mittance lists".  The  routing  of  large  checks  to  Exchange 
banks  should  be  to  a  large  extent  under  his  general  instruc- 
tions and  he  should  inspect,  each  day,  the  Transit  depart- 
ment's debit  list  for  cash  letters  to  Exchange  banks. 


CHAPTER  XII 


THE  EXCHANGE  TELLER 


Exchange  Teller's  Duties 

The  many  and  varied  duties  of  the  Exchange  teller  may 
all  be  grouped  around  the  fundamental  duty  of  transferring 
funds  from  city  to  city  for  the  bank's  clients.  The  In-Mail 
and  Transit  departments  perform  a  large  amount  of  work  in 
connection  with  the  transfer  of  funds  from  city  to  city  but 
their  field  is  limited  to  the  routine  handling  of  a  limited  class 
of  checks. 

The  Exchange  teller  must  arrange  for  the  purchase  and 
sale  of  exchange  in  large  and  in  small  amounts,  the  issuing  of 
drafts  on  other  banks,  the  ordering  of  transfers  from  one 
Exchange  bank  to  another  and  the  maintaining  of  proper  bal- 
ances in  the  various  banks.  The  functions  of  the  Exchange 
teller  also  include  the  purchase  and  sale  of  time  and  demand 
drafts  on  foreign  banks,  the  issuing  of  travelers'  and  of  com- 
mercial letters  of  credit,  the  cashing  of  drafts  under  letters 
of  credit  and  the  transferring  of  funds  to  and  from  other 
banks. 

The  work  of  the  Exchange  teller  appears  complicated,  not 
because  of  the  complexity  of  any  one  transaction  but  because  of 
the  number  of  different  kinds  of  transactions  and  because  the 
documents  handled  are  not  all  self  explanatory  and  in  most 
cases  require  some  technical  knowledge  of  exchange  opera- 
tions to  be  intelligently  handled.  The  real  complexity  of  the 
Exchange  teller's  work  is  caused  by  the  constant  fluctuations 
in  exchange  rates,  making  it  necessary  for  him  to  keep  in 
close  touch  with  current  economic  conditions. 


The  Exchange  Teller  61 

Bank  Drafts 

A  merchant  in  San  Francisco  has  a  bill  for  $1000  to  pay 
in  New  York  and  purchases  from  the  Exchange  teller  of  The 
First  National  Bank  of  San  Francisco  a  bank  draft.  When 
the  draft  is  paid,  the  account  of  The  First  National  Bank  of 
San  Francisco  is  debited  $1000  by  the  bookkeeper  of  the  Na- 
tional Bank  of  Commerce  in  New  York.  At  the  end  of  the 
month  a  statement  of  all  transactions  for  the  month  is  ren- 
dered by  the  National  Bank  of  Commerce  to  The  First  Na- 
tional Bank.  The  draft  is  listed  on  this  statement  and  is  re- 
turned, cancelled,  to  The  First  National  Bank,  by  which  bank 
it  is  filed  numerically  with  other  cancelled  drafts  for  possible 
future  reference. 

In  issuing  the  draft,  one  of  the  Exchange  tellers  of  The 
First  National  Bank  records  the  number,  the  amount,  and  the 
name  of  the  payee  in  a  "Draft  Register".  This  is  a  loose  leaf 
book  in  which  are  registered  these  facts  for  all  drafts  issued. 
In  this  book  there  are  a  guide  and  a  set  of  blank  pages  for 
each  correspondent  on  which  drafts  are  issued.  Separate 
books  may,  if  warranted,  be  used  for  each  of  the  larger  ac- 
counts. If  the  drafts  are  written  on  a  typewriter  in  dupli- 
cate, only  the  numbers  and  amounts  need  be  recorded  in  the 
draft  register  and  this  recording  may  be  done  by  use  of  the 
adding  machine. 

The  teller's  blotter  must  show  each  day  the  total  of 
"Drafts  Issued"  as  a  subdivision  of  "Individual  Deposits". 
This  information  may  be  obtained  by  copying  forward  from 
the  draft  register  the  totals  of  drafts  issued  against  the  various 
banks  or  it  may  be  obtained  by  listing  in  the  blotter  separately 
the  applications  for  exchange,  an  operation  somewhat  similar 
to  the  listing  in  the  Receiving  tellers'  blotters  of  all  deposit 
tags.  If  these  applications  are  listed  in  the  blotters,  the  total 
amount  for  each  drawee  bank  may  be  kept  separate,  these 
totals  to  be  compared  with  the  totals  in  the  draft  register. 

The  Exchange  teller  must  report  to  the  bookkeepers,  each 
day,  the  total  amount  of  drafts  issued  against  each  bank,  so 
that  the  amounts  may  be  credited  to  the  various  accounts. 
Separate  forms  may  be  used  for  this  report  or  the  draft  regis- 


62  Modern  Banking  Methods 

ter  may  be  submitted  to  the  bookkeepers  and  the  amounts 
copied  by  them  direct  from  the  draft  register  to  the  ledgers. 

Drafts  on  Foreign  Banks 

There  is  little  difference  between  drafts  on  United  States 
banks  and  drafts  on  Foreign  banks. 

One  draft  calls  for  payment  in  U.  S.  gold  dollars,  the 
other  in  a  Foreign  currency. 

In  registering  a  domestic  draft,  the  amounts  of  the  draft 
and  of  the  premium  are  recorded.  In  registering  a  foreign 
draft,  the  amount  in  gold  and  the  amount  in  foreign  currency 
are  recorded,  together  with  the  rate  at  which  converted  from 
one  to  the  other.  A  London  draft  issued,  would  appear  in 
the  register  about  as  follows:  "Date  issued,  September  30, 
1913;  Purchaser,  A.  E.  Jones;  Payee,  Edward  English;  Num- 
ber 1450;  Amount,  Gold  $485.50;  Amount  £100/0/0  Stg. ; 
Rate  of  conversion  4.85^  ;  Time,  On  Demand".  The  amount 
$485.50  would  be  listed  in  the  blotter  under  the  general  head- 
ing "Individual  Credits"  and  possibly  under  one  of  the  sub- 
headings: "Drafts  Issued",  "Foreign  Drafts  Issued",  "Foreign 
Credits"  or  "London  Credits". 

The  foreign  draft  travels  through  the  same  channels  as 
the  domestic  draft  but,  after  being  listed  on  the  monthly 
statement  of  account,  is  usually  retained  by  the  paying  bank 
instead  of  being  returned  to  the  drawer. 

Time  drafts  sold  are  recorded  in  the  draft  register  and  in 
the  teller's  blotter  in  the  same  manner  as  demand  drafts.  The 
time  drafts  are  usually  registered  separately  from  the  demand 
drafts  so  as  to  make  readily  available  at  all  times  approxi- 
mate information  as  to  the  actual  balance  in  London  to  the 
credit  of  the  depositing  bank.  A  separate  account  in  the  Ex- 
change Banks  ledger,  entitled  "Foreign  Time  Drafts  Issued", 
is  sometimes  found  useful.  The  balance  to  the  credit  of  this 
account  at  any  time  will  represent  all  drafts  at  thirty  days 
sight  issued  during  the  preceding  twenty-nine  days,  all  sixty 
day  drafts  issued  during  the  preceding  fifty-nine  days  and  all 
ninety  day  drafts  issued  during  the  preceding  eighty-nine 
days. 


The  Exchange  Teller  63 

In  the  same  way  it  may  be  found  desirable  to  keep  a  sep- 
arate record  of  any  foreign  bills  of  exchange  purchased  which 
will  not  be  payable  immediately  upon  their  receipt  in  London. 
A  proper  title  for  an  account  into  which  these  items  may  be 
charged  is  "Foreign  Time  Bills  Purchased".  The  balance  at 
any  time  to  the  debit  of  this  account  will  show  the  total  of 
all  time  drafts  purchased  but  not  yet  due. 

Draft  Register  or  Credit  Register 

The  Exchange  teller  must  record  in  his  "Foreign  Drafts 
Issued  Register",*  the  numbers,  amounts  and  other  facts  re- 
garding all  drafts  which  he  has  issued  against  the  various  for- 
eign banks.  The  daily  totals  of  drafts  issued  as  shown  by  this 
register  must  then  be  posted  by  the  bookkeepers  to  the 
ledgers. 

Some  banks  record  all  credits  to  foreign  bank  accounts  in 
their  Foreign  Drafts  Issued  Register,  in  addition  to  the  details 
of  drafts  issued.  The  book  should  then  be  called  the  "For- 
eign Credit  Register".  Only  the  daily  totals  of  all  credits  to 
each  bank  are  then  entered  in  the  bookkeepers'  ledgers;  the 
total  of  drafts  issued  does  not  appear  as  a  separate  item. 

Bookkeepers  must  each  day  compare  their  deposit  totals 
with  the  deposit  totals  shown  by  the  tellers'  blotters.  In 
making  this  comparison,  there  must  be  included  in  the  book- 
keepers' figures  the  daily  totals  from  the  Foreign  Credit  Reg- 
ister. A  preliminary  proof  of  the  Foreign  Credit  Register  can 
readily  be  made  by  the  Exchange  department  before  the  totals 
are  reported  to  the  bookkeepers,  if  it  be  provided  that  no 
credits  to  the  accounts  of  foreign  banks  originate  through  any 
other  than  the  Exchange  teller's  blotter.  The  Exchange  tel- 
ler will  then  carry  on  his  blotter  under  the  general  heading 
"Individual  Credits",  a  sub-heading  "Foreign  Credits".  The 
daily  total  for  all  banks  as  shown  by  the  Foreign  Credit  Reg- 
ister must  equal  the  daily  total  under  this  sub-heading. 

Foreign  Debit  Register 

A  "Foreign  Debit  Register"  is  used  in  some  banks  in  pref- 
erence to  the  "Foreign  Bills  of  Exchange  Purchased  Regis- 
ter". The  daily  totals  from  this  Foreign  Debit  Register  must 

*Also  named  "Foreign  Bills  of  Exchange  Sold  Register". 


64  Modern  Banking  Methods 

be  included  in  the  bookkeeper's  daily  total  of  checks  paid  when 
this  total  is  compared  with  and  balanced  to  the  totals  on  the 
tellers'  blotters.  A  preliminary  balancing  of  the  totals  in  the 
Foreign  Debit  Register  to  a  corresponding  total  in  the  Ex- 
change teller's  blotter  is  not  as  easily  accomplished  as  is  the 
comparison  of  credit  totals.  It  is  easy  to  arrange  for  all 
deposits  to  the  accounts  of  foreign  banks  to  originate  in  one 
specified  blotter  but  debits  to  the  accounts  of  foreign  banks 
are  liable  to  originate  in  any  teller's  blotter  and  it  is  difficult 
to  arrange  otherwise. 

One  method  for  handling  these  debits  through  the  Ex- 
change department  is  the  use  of  "dummy"  forms  but  this 
method  is  not  practicable  if  there  are  many  debits  each  day. 
All  tellers  handle  through  their  blotters  transactions  which 
include  debits  to  foreign  bank  accounts ;  they  are  required, 
for  each  such  debit,  to  send  a  memorandum  or  "dummy" 
through  the  Interior  Proving  department  to  the  bookkeepers 
and  to  send  the  debit  itself  direct  to  the  Exchange  depart- 
ment. Dummies  should  be  sent  to  the  bookkeepers  for  debits 
from  the  Exchange  teller  as  well  as  for  those  from  other 
tellers.  By  use  of  this  dummy,  the  records  of  the  Interior 
Proving  department  are  kept  in  balance  with  the  blotters  of 
each  of  the  tellers  and  the  bookkeepers'  Daily  Check  Proofs 
are  kept  in  balance  with  and  show  the  same  details  as  the 
Interior  Proving  department's  records.  A  daily  report  from 
the  Foreign  Debit  Register  must  be  made  to  the  bookkeepers, 
showing  the  total  of  daily  debits  against  each  foreign  account. 
The  bookkeepers  list  the  dummies  for  debits  to  foreign  banks 
in  their  Daily  Check  Proofs,  separately,  making  a  subtotal 
of  them;  the  footing  of  the  totals  on  the  report  from  the 
Foreign  Debit  Register  must  equal  this  subtotal.  The  totals 
are  posted  from  the  report  to  the  various  accounts  in  the 
bookkeeper's  ledger.  Entries  in  the  ledgers  have  then, 
through  the  medium  of  the  Exchange  department,  been  made 
from  the  original  documents  and  not  from  the  dummies.  No 
ledger  records  of  any  kind  should  ever  be  made  from  dum- 
mies unless  the  bookkeeper  making  the  entries  sees  the  origi- 
nal documents  the  same  day  and  carefully  compares  them 
with  the  dummies. 


The  Exchange  Teller  65 

Foreign  Bills  of  Exchange  Purchased 

It  is  preferred  in  some  banks  that  foreign  bills  of  ex- 
change purchased  be  accepted  only  through  the  Exchange  tel- 
ler's blotter.  The  Exchange  teller  either  issues  Cashier's 
Checks  for  them  or  makes  payment  in  coin  or  currency. 

It  is  usually  found  more  convenient  for  the  depositors, 
however,  to  allow  these  bills  of  exchange  to  be  handled 
through  the  tellers'  blotters  and  the  Foreign  Debit  Register 
in  the  same  manner  as  debits  to  foreign  banks.  Provision 
must  be  made  in  the  register  for  a  full  record  of  all  the  vital 
facts  regarding  these  items,  together  with  a  memorandum  as 
to  the  final  disposition  of  each  item. 

The  items  may,  if  preferred,  be  recorded  separately  in  a 
"Foreign  Bills  of  Exchange  Purchased  Register"  and  the  daily 
totals  for  each  bank  posted  to  the  Foreign  Debit  Register  or 
to  the  bookkeeper's  ledger. 

When  there  are  many  foreign  transactions  each  day,  a 
General  Ledger  account  entitled  "Foreign  Bills  Purchased", 
may  be  desirable.  To  this  account  all  foreign  items  may  be 
charged  by  the  tellers  on  their  blotters,  just  as  Transit  Ac- 
count items  are  charged.  The  Exchange  department  will 
then  be  obliged  to  verify  daily  the  total  of  all  foreign  bills 
purchased  which  they  have  received  from  the  tellers.  The 
total  amount  sent  to  each  bank  must  then  be  debited  to  the 
bank  to  which  forwarded  and  must  be  credited  to  "Foreign 
Bills  Purchased". 

Each  foreign  bill  of  exchange  purchased  should  receive 
the  "O.K."  of  one  of  the  bank's  officers  before  it  is  accepted  by 
the  tellers  and  on  it  should  be  marked  by  the  Exchange  teller 
in  pencil,  the  rate  of  exchange  and  the  U.  S.  gold  equivalent. 

Foreign  Accounts:     Bookkeeping 

The  bookkeeper  who  handles  accounts  with  foreign  banks 
should  have  in  his  ledger  two  sets  of  debit,  credit  and  balance 
columns,  one  for  foreign  currency  and  one  for  U.  S.  gold. 
His  records  should  at  all  times  show  the  balance  to  the  debit 
of  each  foreign  account  in  terms  both  of  foreign  currency  and 
of  U.  S.  gold.  All  debits  and  credits  to  foreign  accounts  must 
specify  the  amount  in  U.  S.  gold  and  in  foreign  currency. 


66  Modern  Banking  Methods 

The  amounts  in  U.  S.  gold  are  listed  on  the  blotters,  in  the  Inter- 
ior Proving  department's  records  and  in  the  bookkeepers'  Daily 
Check  Proof;  both  the  U.  S.  gold  amounts  and  the  foreign  cur- 
rency are  listed  in  the  ledger.  A  credit  to  London  for  a  £10/0/0 
Stg.  draft  sold  @  4.85^  would  be  recorded  in  the  U.  S.  gold 
credit  column  of  the  ledger  as  $48.55  and  in  the  Sterling  credit 
column  as  £10/0/0;  a  debit  for  £10/0/0  Stg.  @  4.85  would 
be  recorded  in  the  U.  S.  gold  debit  column  as  $48.50  and  in 
the  Sterling  debit  column  as  £10/0/0.  The  total  amount  due 
from  London  appears  on  the  books  of  the  depositing  bank  as 
a  debit  balance.  These  two  £10/0/0  transactions  result  in  a 
decrease  of  5c  in  the  U.  S.  gold  debit  balance  but  cause  no 
change  in  the  Sterling  balance. 

The  London  demand  balance  as  shown  by  the  ledger  on 
June  1st  was  £10,000/0/0  Stg.  and  $48,400  U.  S.  gold.  The 
buying  rate  for  London  demand  exchange  on  June  1st  was 
4.84;  the  U.  S.  gold  balance  shown  by  the  ledger,  therefore, 
represented  the  actual  value  of  the  Sterling  balance.  There 
have  been  many  transactions  throughout  the  month  and  on 
June  30th  the  Sterling  balance  is  found  to  be  £20,000/0/0. 
It  is  this  Sterling  debit  balance  on  the  books  of  the  United 
States  bank  which  shows  the  amount  on  deposit  in  London. 
Figured  at  the  June  30th  market  rate,  which  is  found  to  be 
4.85,  the  £20,000/0/0  Sterling  balance  is  worth  $97,000.  The 
U.  S.  gold  debit  balance  in  the  ledger  has  during  the  month 
changed  from  $48,400,  the  amount  shown  on  June  1st  to  $96,- 
750  on  June  30th.  The  difference  between  this  amount  and 
the  U.  S.  gold  equivalent  of  the  Sterling  balance  at  the  current 
exchange  rate  is  $250,  and  is  caused  by  the  variation  between 
the  buying  and  selling  rates  for  exchange  throughout  the 
month,  by  the  increase  in  the  exchange  rate  June  30th  over 
that  of  the  previous  month  and  by  minor  debits  and  credits 
for  interest  et  cetera. 

Entries  must  be  made  from  time  to  time  to  adjust  the 
U.  S.  gold  balance  so  that  it  will  truly  represent  the  U.  S. 
gold  equivalent  of  the  Sterling  balance  at  the  current  market 
rate.  Such  adjusting  entries  for  all  foreign  accounts  can  well 
be  made  at  the  end  of  each  month.  Following  this  practice,  it 
is  necessary  on  June  30th  to  debit  London  $250  and  to  credit 


The  Exchange  Teller  67 

the  same  amount  to  Profit  and  Loss  or  to  some  other  earnings 
account.  This  debit  brings  the  book  equivalent  of  the  £20,- 
000/0/0  Stg.  London  debit  balance  up  to  $97,000  U.  S.  gold, 
its  value  at  the  current  market  rate  for  exchange.  A  con- 
venient name  for  the  earnings  account  is  "Foreign  Exchange". 

Minor  Debits  and  Credits 

The  London  bank  debits  its  depositors  various  amounts 
throughout  the  month  for  commissions,  postage,  stamp  tax 
and  translating  endorsements  and  credits  its  depositors  for 
interest  and  other  items.  For  each  such  debit,  the  United 
States  bank  must  credit  its  London  account  a  like  amount  in 
Sterling ;  for  each  credit  it  ^must  debit  the  London  account  in 
Sterling.  Assume  that  the  Bank  of  Montreal  in  London  has 
credited  The  First  National  Bank  of  San  Francisco  £20/0/0 
Stg.  for  interest.  The  First  National  Bank  must  debit  Lon- 
don £20/0/0  Stg.  If  the  rate  is  4.85,  the  U.  S.  gold  equiva- 
lent of  this  amount  is  $97.  The  Exchange  teller  writes  out 
an  office  debit  for  £20/0/0  Stg.  with  the  $97  U.  S.  gold  equiva- 
lent. He  then  either  records  this  debit  in  his  London  Debit 
Register,  enters  the  amount  from  a  dummy  for  the  debit  in 
his  blotter  under  the  heading  "Individual  Checks"  and  sends  the 
dummy  to  the  Interior  Proving  department  or  enters  the  debit 
in  his  blotter  and  sends  it  through  the  Interior  Proving  depart- 
ment to  the  bookkeepers  for  direct  record  in  the  ledger. 

There  must  be  made,  at  the  same  time,  a  credit  to  some 
account  for  $97.00  to  offset  this  debit  on  the  blotter.  The 
amount  may  be  credited  to  "Foreign  Exchange"  and  in  this 
way  appear  at  once  among  the  bank's  earnings.  A  better 
way,  however,  is  to  credit  "Bank  of  Montreal,  London"  $97 
U.  S.  gold,  using  £0-0-0  as  the  Sterling  equivalent.  (In- 
stead of  $97,  $1  may  be  used  for  both  the  debit  and  the  credit.) 
London  has  then  been  debited  $97  U.  S.  gold  and  £20/0/0 
Stg.  The  U.  S.  gold  debit  has  been  offset  in  the  ledger  by  a 
credit  of  $97  but  there  has  been  no  Sterling  credit.  The  U.  S. 
gold  equivalent  of  the  Sterling  balance,  therefore,  remains  un- 
changed while  the  Sterling  balance  is  increased  £20/0/0. 
The  $97  must,  at  the  end  of  the  month,  be  carried  to  the  debit 
of  the  U.  S.  gold  balance  as  a  part  of  the  monthly  adjusting 


68  Modern  Banking  Methods 

entry.  Such  a  transaction  during  the  month  of  June  would 
account  for  $97  of  the  $250  profit  from  the  account.  The  $97 
is  credited  to  London  instead  of  to  Foreign  Exchange  so  that 
the  net  earnings  from  the  account  shall  appear  in  the  one  ad- 
justing entry  at  the  end  of  the  month,  this  making  it  possible 
to  know  at  a  glance  the  net  earnings  for  each  account  each 
month. 

Travelers'  Letters  of  Credit 

Letters  of  identification  are  frequently  forwarded  to  one 
or  two  banks  so  that  the  otherwise  unidentified  holder  of  a 
draft  may  obtain  payment  for  his  draft  but  the  Traveler's  Let- 
ter of  Credit  is  usually  found  more  convenient.  This  is  a 
much  more  formidable  looking  document  than  the  bank  draft. 
It  is  in  the  form  of  a  letter  signed  for  the  issuing  bank  by  the 
President  or  a  Vice-President  and  the  Cashier  or  an  Assistant 
Cashier.  The  letter  is  addressed  in  general  terms  to  all  corre- 
spondent banks  and  bankers.  A  pamphlet  containing  the  names 
of  one  or  more  correspondent  banks  or  bankers  in  each  of  the 
principal  cities  through  which  he  expects  to  travel  is  usually  given 
to  the  holder  of  the  Letter  of  Credit.  A  specimen  set  of  signa- 
tures of  the  issuing  bank's  officers  has  previously  been  filed  with 
each  of  these  banks  and  the  traveler  may  obtain  the  funds 
called  for  by  his  Letter  of  Credit  from  any  one  of  them.  The 
Letter  reads  somewhat  as  follows : 

"This  will  introduce  to  you  Mr.  S.  H.  Roberts,  whose 
signature  appears  below,  and  whom  we  commend  to  your 
kind  attention. 

"Please  cash  drafts  of  Mr.  Roberts  at  sight  on  the 
National  Bank  of  Commerce  in  New  York,  for  any  sum 
not  exceeding  the  aggregate  amount  of  one  thousand  dol- 
lars, each  draft  bearing  the  number  of  this  letter  and  its 
amount  being  endorsed  by  you  hereon. 

"We  engage  that  drafts  drawn  in  compliance  with  the 
terms  of  this  Credit  shall  have  due  honor. 

"Your  charges  are,  of  course,  to  be  paid  by  the  ac- 
credited party. 

"This  Credit  will  continue  in  force  for  one  year  from 
date  and  is  to  be  returned  with  the  final  draft." 

Mr.  Roberts  arrives  in  Pittsburgh  and  wants  $100.  He 
examines  his  list  of  the  issuing  bank's  correspondents  and 


The  Exchange  Teller  69 

from  the  list  selects  the  name  of  an  available  bank.  To  this 
bank  he  presents  the  Letter  of  Credit;  he  requests  that  he  be 
paid  $100.  The  Exchange  teller  fills  out  a  draft  for  this 
amount,  places  upon  the  draft  the  number  of  the  Letter  and 
endorses  upon  the  back  of  the  Letter  the  date,  the  amount  and 
the  name  of  the  paying  bank,  returning  the  Letter  to  Mr.  Rob- 
erts, who  signs  the  draft  and  obtains  his  $100. 

The  draft  is  listed  by  the  teller  on  his  blotter  sheet  un- 
der the  heading  "Transit  Account"  and  is  collected  by  the 
Transit  department  from  the  National  Bank  of  Commerce  in 
New  York.  The  National  Bank  of  Commerce  debits  the 
amount  of  the  draft  to  the  account  of  the  San  Francisco  bank 
and  forwards  it  to  them  for  credit. 

Records  must  be  kept  by  the  bank  issuing  the  Credit  and 
by  the  bank  on  which  the  drafts  are  to  be  drawn,  showing  for 
each  Letter  of  Credit  the  name  of  the  payee,  the  aggregate 
amount  guaranteed,  the  date  issued,  the  date  upon  which  it 
will  expire  and  its  number,  together  with  a  statement  of  the 
provision  made  by  the  payee  for  funds  with  which  to  pay  any 
drafts  and  as  to  method  of  collection.  Whenever  full  pay- 
ment for  the  Letter  of  Credit  is  obtained  at  the  time  it  is  is- 
sued, the  funds  so  received  are  credited  to  an  account  bear- 
ing some  such  title  as  "Circular  Letters  of  Credit".  Drafts 
issued  under  these  letters  are,  when  paid,  debited  to  the  ac- 
count "Circular  Letters  of  Credit".  Other  Letter-of-Credit 
drafts  are  debited  to  various  depositors'  accounts.  Still  oth- 
ers are  debited  to  City  Cash  Collections,  to  be  collected  by  the 
Collection  department.  The  records  must  further  show,  for  each 
draft  paid,  the  date  recorded,  the  place  and  date  of  payment 
and  the  amount.  It  is  found  very  convenient  to  use  a  loose 
leaf  book  for  these  records,  the  book  to  contain  one  page  for 
the  record  of  each  Letter  of  Credit.  In  different  sections  of 
the  book  can  be  kept  the  records  of  different  classes  of  Letters 
of  Credit:  Travelers'  Letters  authorizing  drafts  in  U.  S.  gold 
on  New  York,  Travelers'  Letters  authorizing  drafts  in  Ster- 
ling on  London,  Commercial  Letters  et  cetera. 

Upon  receipt  from  the  National  Bank  of  Commerce  in 
New  York  of  the  cash  letter  containing  the  Roberts  draft,  the 
Exchange  teller  opens  the  Letter-of-Credit  record  book  to  the 


70  Modern  Banking  Methods 

New  York  Travelers'  Letters  section,  to  sheet  number  2342,  and 
there  finds  that  L/Cr.  No.  2342  was  issued  in  favor  of  S.  H. 
Roberts,  for  $1000,  that  no  drafts  have  been  paid  previous  to 
this  and  that  any  drafts  presented  under  the  credit  are  to  be 
collected  from  the  Roberts  Engraving  Company.  The  teller 
then  records  the  payment  of  the  draft  on  this  page,  enters  the 
cash  letter  on  his  blotter  as  a  credit  to  National  Bank  of  Com- 
merce in  New  York  and  enters  the  draft  on  his  blotter  under 
the  heading  "Debit  City  Cash  Collections." 

Drafts  with  Documents 

A  San  Francisco  firm  shipping  asparagus  to  a  merchant  in 
Houston  obtains  payment  for  the  shipment  by  means  of  a 
draft  with  documents  attached.  When  the  asparagus  is  surren- 
dered to  the  railroad  company  for  shipment,  the  railroad  com- 
pany issues  a  bill  of  lading  in  which  the  shipment  is  made 
deliverable — not  to  the  merchant  to  whom  the  goods  are  be- 
ing shipped  but  to  the  shipper's  own  order.  The  shipper  then 
issues  a  draft  against  the  Houston  merchant  for  the  price  of 
the  asparagus.  This  draft  is  made  payable  to  the  order  of  the 
collecting  bank.  The  bill  of  lading  is  endorsed  in  blank  by  the 
shipper  and  attached  to  the  draft.  To  obtain  the  asparagus,  the 
Houston  merchant  must  obtain  the  bill  of  lading.  To  obtain 
the  bill  of  lading,  he  must  pay  the  draft.  If  payment  of  the 
draft  is  refused,  the  shipment  remains  subject  to  the  shipper's 
order. 

The  purchaser  is  under  no  obligation  to  arrange  for  credit 
at  the  bank  at  the  time  he  orders  the  shipment.  He  has 
merely  to  convince  the  shipper  that  he  is  a  bona  fide  pur- 
chaser and  expects  to  be  able  to  pay  for  the  shipment  upon  its 
arrival.  When  he  orders  the  goods  shipped,  he  instructs  the 
shipper  to  draw  on  him  and  to  attach  the  bill  of  lading  or  other 
shipping  documents  to  the  draft. 

Commercial  Letters  of  Credit 

A  merchant  purchasing  goods  from  a  foreign  shipper  must, 
on  the  other  hand,  arrange  for  credit  at  the  time  he  places  his 
order.  Distances  are  greater.  Laws  of  one  nation  are  dif- 
ferent from  those  of  another.  The  foreign  merchant  wants 
to  know  that  his  shipment  will  be  accepted  by  the  consignee 


The  Exchange  Teller  71 

and  that  he  will  receive  in  exchange  for  it  the  payment  agreed 
upon.  He  does  not  want  to  wait  for  his  money  until  after  the 
shipment  has  been  received  by  the  consignee  and  paid  for. 
He  insists  upon  obtaining,  as  soon  as  the  goods  are  shipped 
and  before  they  have  left  his  control,  either  his  money  or  a 
negotiable  draft  for  the  amount.  His  own  draft  with  docu- 
ments cannot  be  negotiated  unless  accompanied  by  good  evi- 
dence that  the  draft  will  be  honored  upon  presentation.  The 
Commercial  Letter  of  Credit,  obtained  by  the  purchaser  be- 
fore he  orders  the  shipment,  provides  such  evidence. 

The  Commercial  Letter  of  Credit  is  usually  addressed  to 
only  one  bank,  frequently  to  a  bank  in  London.  It  orders 
that,  upon  receipt  of  bills  of  lading  and  other  described  docu- 
ments showing  certain  specified  shipments  to  have  been  made, 
the  bank  shall  pay  a  draft  or  drafts  drawn  by  the  foreign  mer- 
chant or  his  order  and  not  exceeding  in  the  aggregate  a  cer- 
tain sum ;  the  Letter  also  contains  instructions  as  to  the  hand- 
ling of  the  documents. 

The  records  of  Commercial  Letters  of  Credit  and  of 
drafts  paid  under  them  and  the  methods  of  handling  are  very 
similar  to  the  records  and  the  methods  for  Travelers'  Letters 
of  Credit.  For  Commercial  Letters  of  Credit,  the  register 
must  also  provide  for  full  information  as  to  the  documents. 

Telegraphic  Transfers 

Another  much  used  method  for  transferring  funds  from 
city  to  city  is  the  "Telegraphic  Transfer". 

The  principles  involved  in  transferring  funds  "by  wire" 
are  the  same  as  in  transferring  funds  by  mail.  The  amount  to 
be  transferred  is,  in  both  instances,  paid  to  a  bank  in  one 
city  and  paid  out  by  a  bank  in  a  second  city ;  the  bank  in  the 
first  city  must  reimburse  the  bank  in  the  second  city  by  for- 
warding cash  or  exchange. 

The  methods  of  transfer  "by  wire"  are  of  necessity  differ- 
ent from  the  usual  methods  of  transfer  by  mail.  When  funds 
are  to  be  transferred  by  mail,  the  person  who  wants  the  trans- 
fer made  forwards  to  the  payee  an  order  on  the  paying  bank 
for  the  amount.  For  a  transfer  "by  wire",  the  order  is  sent 
by  telegram  from  a  local  bank  direct  to  the  paying  bank  and 


72  Modern  Banking  Methods 

the  paying  bank  notifies  the  payee  to  call.  When  he  orders 
funds  transferred  by  telegram,  the  purchaser  obtains  from  the 
bank  a  receipt  for  his  money  and  this  receipt  he  does  not  for- 
ward to  the  payee  but  keeps  in  his  own  possession. 

Such  large  amounts  can  be  transferred  in  such  a  short 
time  by  use  of  the  telegram,  that  every  possible  safeguard 
should  be  thrown  around  this  method  of  transfer.  Banks  re- 
fuse, as  a  rule,  to  make  any  payments  under  telegraphic  order 
unless  the  order  is  in  code.  Payments  are  not  made  under 
open  telegrams.  When  some  particular  code  has  not  been 
agreed  upon,  the  American  Bankers'  Association  code  is  gen- 
erally used.  Some  agreed  upon  check-word  must  appear  in 
the  telegram  as  evidence  of  its  genuineness.  This  first  step  is 
essential  to  prevent  payments  under  forged  telegrams.  A  sec- 
ond step  is  to  make  the  records  so  simple  and  so  clear  that  the 
Auditing  department  will  quickly  discover  any  payments 
made  by  the  bank's  correspondents  but  not  credited  to  them. 

For  auditing  purposes,  the  blank  receipts  for  telegraphic 
transfers  should  be  numbered  consecutively  and  the  bank's 
records  should  show  every  number  properly  accounted  for.  A 
record  of  receipts  issued  may  be  obtained  by  use  of  carbon, 
each  receipt  being  made  in  duplicate,  the  original  to  be  given 
to  the  purchaser  and  the  carbon  copy  to  be  retained  by  the 
bank.  The  telegrams  should  be  sent  from  these  copies  of  the 
receipts. 

If  it  is  preferred  not  to  use  carbon,  the  receipts  can  be 
kept  in  pads,  numbered  consecutively,  ready  for  use,  and  can 
be  recorded  in  a  separate  loose-leaf  register.  There  are 
some  transfers  for  which  the  issuance  of  receipts  is  superflu- 
ous, such  as  transfers  made  from  one  depositary  to  another  for 
the  purpose  of  adjusting  balances  between  Exchange  banks, 
and  it  is  for  this  reason  that  a  loose-leaf  register  is  sometimes 
preferred  to  a  record  formed  from  carbon  copies  of  the  re- 
ceipts. 

The  daily  total  from  the  Telegraphic  Transfers  Register 
may  be  carried  into  the  teller's  blotter  under  the  heading  'In- 
dividual Deposits"  or  the  amounts  may  be  carried  in  detail 
from  the  register  into  the  blotter  or  it  may  be  preferred  to  use 
the  applications  for  telegraphic  exchange  as  deposit  tags  and 


The  Exchange  Teller  73 

enter  them  directly  into  the  blotter.  Likewise,  the  book- 
keepers may  obtain  the  entries  for  their  ledgers  from  the  Tele- 
graphic Transfers  Register  or  from  the  applications.  It  may 
be  found  convenient  to  enter  the  amounts  in  the  teller's  blot- 
ter, in  the  Interior  Proving  department's  records  and  on  the 
bookkeeper's  Daily  Deposit  Proof  from  the  applications  and  enter 
the  amounts  in  the  bookkeeper's  ledger  from  the  register.  If  this 
method  is  followed,  arrangements  must  be  made  so  that  the 
bookkeeper  will  compare  the  total  of  these  applications  with 
the  daily  total  of  the  Register,  in  order  that  a  variation  in  the 
total  shall  not  be  offset  by  some  contra  error  in  the  ledger. 

Premiums  received  for  Telegraphic  Transfers  and 
amounts  received  to  cover  cost  of  telegrams  may  be  recorded 
in  the  Register  and  from  there  carried  to  the  teller's  blotter 
as  credits  to  Eastern  Exchange. 

When  a  telegram  is  received  ordering  a  payment  made 
for  account  of  some  correspondent,  the  Exchange  teller  first 
determines  whether  the  telegram  is  genuine.  A  notice  is 
then  either  mailed  or  telephoned  to  the  payee.  When  the 
payee  calls,  he  signs  a  receipt  in  duplicate  for  the  amount. 
Payment  is  made  to  him  and  the  account  of  the  bank  which 
ordered  the  payment  is  debited  for  the  amount.  To  this  bank 
is  forwarded  an  advice  of  the  debit,  together  with  the  dupli- 
cate receipt. 

When  payment  is  made  for  a  bank  with  which  or  by 
which  no  current  account  is  carried,  the  amount  must  be 
debited  to  City  Cash  Collections  or  to  Suspense  Account 
pending  receipt  of  a  remittance  to  cover.  The  debit  is  listed 
on  the  teller's  blotter  either  to  "Individual  Checks",  to  "City 
Cash  Collections"  or  to  "General  Ledger  Checks,"  according  to 
which  account  is  being  debited. 

Exchange  Teller's  Blotter 

It  is  sometimes  convenient  to  use  for  the  Exchange  tel- 
ler's blotter  two  sheets  of  different  colors,  one  for  credits  and 
one  for  debits.  The  number  of  subdivisions  required  may 
vary.  The  first  object  of  a  teller's  blotter  is  to  furnish  a  con- 
cise record  of  all  cash  transactions  handled  by  the  teller,  in 
order  that  he  may  know  each  day  that  all  cash  which  he 


74 


Modern  Banking  Methods 


handles  is  accounted  for.  There  is  no  reason,  however,  why 
the  blotter  should  not  incidentally  furnish  much  useful  in- 
formation; all  subdivisions  which  will  aid  it  in  doing  this  or 
which  will  help  to  simplify  the  records  should  be  used 
When  all  the  day's  figures  have  been  assembled  and  the  to- 
tals for  the  various  subdivisions  combined  to  show  only  one 
total  for  each  main  division,  the  results  will  appear  about  as 
follows : 

Recapitulation  of  Exchange  Teller's  Blotter 
Dr.  Cr. 

Credit  Accounts  as  Follows:     ,  Debit  Accounts  as  Follows: 

General  Ledger  Credits       $       100  General  Ledger  Debits     -    $  35,000 

Cashier's   Checks   Issued          60,000 

~          L.     ,,     ,  CA    Iransit    Account 

Domestic  Exchange  -  50 

Certificates  of  Deposit       -          7,000 


Cash   Collections 


3,500 
1,500 


Total  G/L  Credits  -      -    $  67,150      Total  G/L  Checks  -  $  40,000 

Individual  Deposits    -      -      132,799  Individual   Checks      -  -  120,000 

Total  Deposits  -      -      -    $199,949       Total  Checks  paid    -  -  $160,000 

Collection  Desk  Drafts*1  -  22,000 

In-Mail  Drafts*1  -      -  -  10,000 

A.M.  Clearing     -      -  -  500 

P.M.   Clearing     -      -  -  2,500 
Coin  and  Currency                                Coin  and  Currency 

from  Vault             50                               to  Vault  5,000 

Over 1 


$200,000 


$200,000 


•*See  Page  86. 
*2See  Page  51. 


CHAPTER  XIII 


THE  COLLECTION   TELLER 

Collection  Teller's  Duties 

The  Collection  department  is,  in  most  banks,  a  constant 
source  of  expense.  This  and  the  Transit  department  are  both 
indispensable  parts  of  the  equipment  of  a  modern  bank.  Both 
departments  are  maintained  because  of  specific  services  which 
must  be  rendered  to  the  depositors  and  not  as  a  direct  means 
of  increasing  the  bank's  earnings.  Both,  if  well  equipped  and 
intelligently  used,  have  a  certain  amount  of  advertising  value. 
Occasionally,  for  the  services  rendered  by  the  Collection  depart- 
ment, large  enough  charges  are  made  to  reimburse  the  bank 
for  the  actual  outlay  of  expense  but,  usually,  the  department 
is  conducted  at  a  net  loss. 

It  is  the  duty  of  the  Collection  teller  to  collect  or  attempt 
to  collect  all  items,  other  than  cash  items,  which  are  payable 
in  other  cities  or  towns  and  all  drafts,  notes,  checks  or 
coupons  which  are  drawn  against  or  payable  by  local  in- 
dividuals, firms,  corporations  or  banks  but  which  are  not 
collectible  through  the  Clearing  House. 

Notes  which  the  bank  has  discounted  are,  in  some  banks, 
charged  to  the  Collection  teller  on  the  due  date  and  the 
amounts  credited  by  him  to  Bills  Receivable. 

Drafts  With  Documents 

Drafts  with  documents  attached  are  usually  handled  both 
in  the  sending  bank  and  in  the  receiving  bank  by  the  Col- 
lection teller.  When  accepted  by  the  Collection  teller,  these 
drafts  are  recorded  by  him  in  his  Collections  Register. 

Frequently,  a  firm  shipping  goods  covered  by  such  a 
draft  wishes  the  funds  advanced  as  soon  as  the  shipment  has 


76  Modern  Banking  Methods 

been  made.  This  result  can  be  accomplished  by  allowing 
the  draft  to  be  placed  to  the  firm's  credit  through  the  Re- 
ceiving teller's  blotter  and,  by  the  Receiving  teller,  charged 
to  Transit  Account.  Inasmuch,  however,  as  interest  should 
be  collected  on  the  amount  for  the  time  the  draft  is  out- 
standing, this  does  not  seem  to  be  the  best  method  for  ad- 
vancing the  funds.  It  is  not  desirable  and  does  not  appear 
to  be  necessary  to  complicate  the  work  of  the  Transit  depart- 
ment by  adding  to  its  duties  the  collection  of  items  which 
bear  interest  or  for  which  immediate  payment  is  not  expected. 

A  more  satisfactory  way  of  making  such  advances  would 
seem  to  be  through  the  Note  department.  The  depositor  is 
required  to  sign  a  note  for  the  amount  of  each  such  draft 
and  to  give  the  draft  and  documents  to  the  Note  teller  as 
security  for  the  loan.  It  is  better  to  make  these  advances 
through  the  Note  department  because,  even  if  such  drafts 
were  charged  to  Transit  Account,  the  number  of  interest- 
bearing  items  handled  by  the  Transit  department  would  not 
be  large  while  all  items  handled  by  the  Note  teller  are  interest 
bearing.  The  Note  teller  will  see  that  the  security  is  kept 
intact  and  will  collect  interest  when  the  note  is  paid.  There 
is  the  further  advantage  that  the  clerks  in  the  Transit  depart- 
ment will  not  be  turned  aside  from  their  habit  of  expecting 
all  items  to  be  remitted  for  promptly  by  return  mail. 

The  Note  teller  retains  the  note  in  his  files  and  gives  the 
draft  to  the  Collection  department  for  collection.  The  Collec- 
tion department  follows  up  the  draft  and  obtains  payment  on 
arrival  of  the  goods,  paying  the  Note  teller  for  the  draft  and 
recording  the  date  of  payment  in  the  Collections  Register.  The 
Note  teller  credits  the  amount  to  Bills  Receivable,  returning  the 
cancelled  note  to  the  depositor. 

Other  Drafts 

More  drafts  are  handled  without  documents  than  with. 
Many  firms  make  all  their  out-of-town  sales  on  credit,  ship- 
ping their  merchandise  direct  to  the  purchasers  and  then 
issuing  drafts  against  the  purchasers  as  a  means  of  collecting 
their  bills.  Some  firms  frequently  deposit  hundreds  or 
drafts  with  the  Collection  teller  at  one  time,  the  drafts  to  be 


The  Collection  Teller  77 

forwarded  by  the  Collection  teller  to  all  parts  of  the  country 
for  collection,  the  depositor's  account  to  be  credited  only 
when  payment  is  actually  received. 

Checks  for  Collection 

During  the  panic  of  1907,  the  banks  in  many  cities  re- 
fused to  accept  on  deposit  as  cash  any  checks  on  out-of- 
town  banks.  These  checks  were,  instead,  left  by  the  de- 
positors with  the  Collection  tellers  for  credit  to  the  de- 
positors' accounts  when  paid.  The  banks  learned  from  this 
experience  that  it  requires  more  labor  and  expense  to  collect 
the  items,  one  at  a  time,  through  the  Collection  department 
than  to  collect  them  in  groups  on  cash  letters  through  the 
Transit  department.  Collecting  the  items  through  the  Transit 
department  increases  the  balance  of  outstanding  items  in 
Transit  Account  and  therefore  decreases  the  bank's  loanable 
funds  (except  when  increased  credit  balances  are  kept  with 
the  bank  by  the  depositors  of  the  out-of-town  checks).  The  sav- 
ing in  cost  of  handling  which  results  from  collecting  out-of-town 
checks  through  Transit  Account  is  greater  than  any  possible  loss 
in  interest  caused  by  the  decrease  in  loanable  funds. 

The  bulk  of  checks  on  out-of-town  banks  are,  therefore, 
as  a  matter  of  convenience  and  economy,  credited  immedi- 
ately to  the  depositors'  accounts  and  collected  through 
Transit  Account.  A  few  checks  remain  which  must  be 
handled  as  collections  rather  than  as  cash  items.  The 
depositor  occasionally  wants  telegraphic  information  as  to 
whether  a  check  is  honored.  The  bank  or  the  depositor 
sometimes  has  reason  to  doubt  whether  a  certain  check  will 
be  paid  upon  presentation.  Crediting  out-of-town  checks  as 
cash  is  equivalent  to  loaning  money  to  the  depositor.  Some 
out-of-town  checks  are  larger  in  amount  than  the  depositor's 
credit  standing  or  the  size  of  his  average  balance  would 
warrant  the  bank  in  accepting  as  cash.  All  such  checks  should 
be  sent  to  the  Collection  department  to  be  credited  to  the 
depositors'  accounts  only  when  paid. 

Outgoing  Collections:    Records 

There  is  a  lack  of  uniformity  in  methods  for  recording, 
collecting  and  disposing  of  these  various  outgoing  collections. 


78  Modern  Banking  Methods 

Common  to  all  the  different  methods  is  the  use  of  carbon. 
The  lack  of  uniformity  is  in  the  size,  shape  and  wording  of 
the  collection  records  and  of  the  outgoing  letters  and  in  the 
choice  of  forms  to  be  combined  with  each  other  in  the  use 
of  carbon. 

For  every  collection  there  must  be  an  outgoing  collec- 
tion letter. 

A  record  must  be  kept  of  the  amount,  the  depositor's 
name,  the  bank  to  which  sent  and  the  ultimate  fate  of 
each  collection,  together  with  a  memorandum  of  any 
special  instructions. 

Every  collection  for  which  payment  is  secured  must  be 
either  credited  to  a  depositor's  account  or  remitted  for; 
the  Collection  teller  must  fill  in  either  a  credit  tag  or  an 
application  for  exchange  or  must  issue  a  Cashier's 
Check. 

A  credit  advice  must  be  sent  to  the  depositor  for  every 
amount  credited  to  his  account. 

An  office  debit  must  be  made  out  for  every  credit 
advice  received  by  the  bank. 

Collection  letters  are  sometimes  written  in  quadruplicate 
or  even  in  quintuplicate,  the  copies  so  obtained  being  used  for 
these  various  purposes. 

Out-Collections  Register 

A  method  which  has  been  found  to  work  very  satisfactorily 
is  to  write  the  letters  in  triplicate,  retain  the  duplicate  copies  to 
serve  as  a  Collections  Register  and  forward  the  original  and  the 
triplicate  with  the  collection.  On  one  of  the  outgoing  letters 
are  printed  in  red -ink  the  words  "Retain  this  letter  for  your 
files"  and  on  the  other  "Return  this  copy  with  your  advice  of 
payment".  A  majority  of  banks  desire  to  keep  the  incoming 
letter  for  their  records.  It  is  proper  that  they  should  do  so. 
Sending  the  letter  to  them  in  duplicate  makes  it  possible  for 
them  to  retain  the  original  for  their  files  and  to  return  the 
other  copy  with  their  advice  of  payment  or  with  the  rejected 
item.  Many  banks  stamp  with  their  "Paid"  stamp  the  copy 
which  they  are  returning  and  in  this  way  avoid  making  out  a 
credit  advice. 

A  copy  of  the  outgoing  collection  letter  having  been  returned 
to  the  bank  with  advice  of  payment,  the  Collection  teller  makes 
out  the  credit  tag  and  credit  advice  from  this  copy  and  is  saved 


The  Collection  Teller  79 

the  time  of  looking  up  the  records  for  the  depositor's  name  and 
other  necessary  information.  Full  information  regarding  the 
collection  is  automatically  brought  to  hand.  The  register  need 
not  be  referred  to  except  after  the  entries  have  all  been  made 
and  then  only  for  the  purpose  of  recording  the  "Paid"  stamp 
upon  the  record  of  all  paid  items. 

For  identification  when  the  item  is  paid  or  when  it  is 
returned  unpaid,  every  outgoing  collection  should  be  numbered 
and  this  number  placed  upon  the  original,  the  duplicate  and  the 
triplicate  of  the  outgoing  letter.  The  duplicate  copies  of  the 
outgoing  letters,  filed  numerically,  constitute  an  Out-Collections 
Register.  This  Register  should  be  divided  into  an  active  and 
an  inactive  section.  All  the  records  are  at  first  filed  in  the  active 
section;  each  page  must  be  transferred  to  the  inactive  section  as 
soon  as  all  the  items  on  the  page  are  either  paid  for  or  returned 
unpaid. 

The  letters  may  be  made  up  in  pads  with  several  on  one 
page  or  they  may  be  made  up  with  only  one  letter  to  a  page; 
it  is  a  matter  of  individual  opinion  which  is  the  more  convenient. 
Whether  the  records  shall  be  filed  in  a  binder  and  thereafter 
form,  a  book  register  or  be  filed  in  a  box  like  cards  depends  to 
a  large  extent  on  the  number  of  transactions,  the  size  and  shape 
adopted  for  the  forms  and  the  number  of  forms  to  a  page  in 
the  register.  A  convenient  arrangement,  if  the  letters  are  filled 
in  by  hand,  is  for  the  forms  to  be  seven  inches  long  by  three  and 
one-fourth  inches  wide  and  to  be  printed  with  six  on  a  page  but, 
if  a  typewriter  be  used,  a  wider  and  shorter  form  is  more  con- 
venient. The  original  and  triplicate  sheets  should  have  the  let- 
ters separated  from  each  other  by  perforations;  the  duplicate 
should  have  a  margin  on  the  left  side  for  binding. 

Different  series  of  numbers  and  separate  binders  may  be 
found  convenient  for  different  classes  of  items.  For  auditing 
purposes,  a  useful  classification  is  by  depositors:  one  binder  for 
collections  from  banks  within  the  State,  one  for  those  from  banks 
outside  the  State,  one  for  items  received  over  the  counter  and 
possibly  one  each  for  items  from  those  several  depositors  from 
whom  the  largest  numbers  of  collections  are  received.  Such  a 
classification  makes  it  possible  to  quickly  locate  the  record  of  the 
items  from  any  one  depositor. 


80  Modern  Banking  Methods 

In-Coming  Out-of-Town  Collections 

Collections  on  out-of-town  drawees  received  from  out-of- 
town  depositors  should  be  recorded  in  a  separate  section  of  the 
Out-Collections  Register.  As  registered,  the  number  should 
be  placed  upon  the  incoming  letters  and  the  letters  filed  in  the 
general  files.  An  inquiry  from  a  depositor  as  to  any  item  can 
then  be  answered  by  obtaining  the  depositor's  letter  from  the 
general  files.  This  will  show  the  collection  number  and  refer- 
ence to  the  register  can  be  readily  made.  The  auditors  receive 
many  inquiries  regarding  items  which  do  not  fit  the  descriptions 
given  by  the  inquirers.  Items  which  cannot  be  readily  identified 
by  reference  to  the  letter  files  can  frequently  be  found  and  identi- 
fied by  reference  to  this  section  of  the  Out-Collections  Register. 

Returns  for  Outgoing  Collections 

When  advice  of  payment  is  received  for  an  outgoing  collec- 
tion, either  a  bank  draft  for  the  proceeds  accompanies  the  advice 
of  payment  or  else  the  Collection  teller  must  make  out  an  office 
debit  against  the  account  of  the  collecting  bank  in  order  to  ob- 
tain the  funds.  The  funds  must  be  remitted  to  the  depositor  or 
to  some  place  ordered  by  him  or  they  must  be  credited  to  his  ac- 
count. If  remitted,  an  application  for  exchange  and  a  letter  of 
enclosure  for  the  draft  must  be  written.  If  credited  to  his  ac- 
count, a  credit  tag  must  be  made  out  and  an  advice  of  credit  sent 
to  the  depositor. 

These  credit  advices  and  credit  tags  should  be  made  in  one 
operation,  by  use  of  carbon,  the  original  to  be  used  for  the  credit 
advice  and  the  carbon  copy  for  the  credit  tag.  The  advice  slip 
may  be  shorter  than  the  credit  tag.  This  makes  it  unnecessary  to 
remove  the  carbon  in  order  to  omit  from  the  advice  details  which 
are  of  no  interest  to  the  depositor  but  which  must  be  recorded 
upon  the  credit  tag.  The  credit  tag  being  a  carbon  copy  of  the 
advice,  exact  information  is  always  available  as  to  what  has  been 
advised  to  the  depositor.  It  is  natural  for  any  clerk  to  give 
clearer  and  more  complete  information,  when  he  writes  the  facts 
only  once  and  does  not  have  to  duplicate  the  information  on 
differently  arranged  forms.  Inquiries  from  depositors  are,  there- 
fore, more  readily  answered  than  when  separate  forms  were  used 
and  are  materially  reduced  in  number. 


The  Collection  Teller  81 

City  Cash  Collections 

No  small  part  of  the  work  of  the  Collection  teller  consists 
in  the  handling  of  City  Cash  Collections.  These  cash  items  on 
local  firms  are  recorded  by  the  Collection  teller  on  numbered 
forms  in  duplicate.  The  originals  of  these  forms  constitute  a 
City  Cash  Collections  Register;  the  duplicates  are  used  as 
collection  tags  attached  to  the  various  items. 

Credit  tags  are  not  made  out  when  payment  is  received  for 
these  items.  Record  of  the  number  and  amount  of  each  collec- 
tion paid  is  made  direct  on  the  Collection  teller's  blotter  under 
the  heading  "Credit  City  Cash  Collections." 

Incoming  Collections 

It  is  important  that  the  Collection  teller  be  able  to  quickly 
locate  any  item  which  he  may  hold  for  collection.  A  draft  for 
$159.78,  issued  by  the  Meadville  Wholesale  Company  on  A.  L. 
Moore  Treasurer,  forwarded  from  Meadville  to  Philadelphia 
and  from  Philadelphia  to  San  Francisco  for  collection,  is  given 
collection  number  "14268"  by  the  bank  in  Philadelphia  and  "46" 
by  the  San  Francisco  bank.  The  draft  is  presented  for  payment 
and  notice  left.  A  check  is  received  from  Jones  Brothers  in  pay- 
ment. A.  L.  Moore  is  treasurer  of  Jones  Brothers  but  the  bank 
has  no  knowledge  of  this  and  is  unable  to  locate  the  collection 
without  first  being  given  the  collection  number,  the  name  of  the 
drawee  or  the  name  of  the  Philadelphia  bank  or,  for  a  note,  the 
name  of  the  maker  or  the  due  date.  Different  facts  are  given 
for  different  classes  of  items  and  this  necessitates  different 
methods  of  filing  and  of  recording.  For  drafts  with  docu- 
ments or  for  notes,  the  incoming  collection  letters  should 
be  sent  to  the  general  letter  files  at  once.  For  drafts  which 
are  to  be  held  for  collection  only  a  few  days,  the  incoming 
letters  may  be  held  and  not  sent  to  the  general  letter  files 
while  the  collections  are  outstanding. 

Incoming  Notes  for  Collection 

Notes  are  usually  received  for  collection  before  they  are 
due.  A  few  days  before  their  due  date,  notice  that  the  notes 
are  held  by  the  bank  for  collection  must  be  sent  to  the  mak- 
ers. On  the  due  date,  some  of  the  notes,  if  not  paid,  must 


82  Modern  Banking  Methods 

be  given  to  a  notary  for  protest.  It  is,  therefore,  impor- 
tant that  a  record  of  them  be  kept  under  the  headings  of  the 
different  due  dates.  For  this  record,  Collection  tellers  usually 
prefer  that  there  be  only  one  page  for  each  day's  notes.  These 
pages  may  be  in  a  bound  book  or  in  loose  leaf  form.  This  is 
called  the  "In-Collection  Note  Tickler"  or  the  "Collection 
Teller's  Daily  Bill  Book."  Whether  it  is  a  vital  record  of  the 
Collection  department  or  merely  an  auxiliary  memorandum 
depends  on  what  other  records  of  the  items  are  kept  by  the 
Collection  teller. 

In-Collections  Register 

The  In-Collections  Register  may  well  be  loose  leaf  in 
form  and  the  records  filed  in  a  box  or  in  a  binder  according 
to  their  shape  and  size.  In  registering  an  item  on  one  of 
these  sheets,  carbon  may  be  used  and  other  records  made. 

In  The  First  National  Bank  of  San  Francisco,  a  large 
proportion  of  the  incoming  notes  and  bill-of-lading  drafts  col- 
lected must  be  remitted  for  by  bank  draft.  An  application  for 
exchange  must  be  filled  in  and  given  to  the  Exchange  teller  for 
each  such  collection  paid.  The  In-Collections  Register  consists  of 
forms  on  slips  of  paper  of  the  same  size  and  shape  as  those 
used  for  applications  for  exchange  (four  and  one-half  inches 
by  five  and  one-half  inches).  Each  form  is  printed  with  a 
collection  number  and  blanks  calling  for  a  full  record  of  the 
facts  regarding  one  collection.  The  forms  are  filed  by  the 
collection  numbers  in  a  card  file.  Separate  files  are  used  for 
the  outstanding  and  for  the  closed  records.  Forms  of  differ- 
ent color  (with  a  slight  variation  in  the  printing),  to  be  used 
as  applications  for  exchange  when  they  receive  the  collection 
teller's  "Paid"  stamp,  are  padded  by  the  printer  alternately 
with  these  forms  and  bear  the  same  collection  numbers. 
The  In-Collections  Register  and  the  application  for  exchange  are 
filled  in  at  one  time  by  use  of  carbon. 

Payment  for  collections  is  frequently  received  at  the  last 
moment  before  the  close  of  banking  hours.  The  Collection 
teller  has  no  time  at  that  moment  to  make  out  an  application 
for  exchange.  It  is  very  convenient  to  have  one  already  made 
out.  He  accepts  payment  for  and  surrenders  the  note.  He 


The  Collection  Teller  83 

then  takes  the  original  form  and  the  duplicate,  stamps  both 
"Paid",  places  the  original  on  a  spindle  or  in  a  tray  for  filing 
and  gives  the  payment  and  the  application  for  exchange  to 
an  assistant,  to  be  recorded  through  his  blotter. 

All  notes  and  all  bill-of-lading  drafts  are  recorded  on 
these  forms  and  the  collection  letters  received  with  them  are 
sent  to  the  general  files  after  the  collection  numbers  have 
been  recorded  upon  them.  Inquiries  from  depositors  can  be 
answered  by  referring  to  these  letters  for  the  collection  num- 
bers. 

The  original  forms  of  this  In-Collections  Register  are 
filed  by  collection  numbers.  The  collections,  until  paid,  are 
filed  alphabetically  by  name  of  payor  and  the  applications  for 
exchange  by  due  dates;  this  order  of  filing  is  sometimes  re- 
versed for  notes,  the  notes  being  filed  by  due  dates  and  the 
applications  by  payor. 

Any  item  can  be  readily  found  provided  either  the  name 
of  the  payor,  the  name  of  the  depositor,  the  due  date  or  the 
collection  number  be  given. 

Bill-of-Lading  Drafts 

In  recording  drafts  with  documents  attached,  a  "tickler 
date",  to  indicate  when  the  goods  covered  by  the  Bill  of 
Lading  are  expected  to  arrive,  is  recorded  instead  of  the 
due  date.  This  date  can  be  altered  from  time  to  time  when 
it  is  found  that  a  shipment  has  been  delayed  or  that  there 
is  other  cause  for  delay  in  payment  of  the  draft.  The  bank 
from  which  the  draft  was  received  should  be  advised  of 
non-payment.  Bills  of  lading  should  never  be  returned  on 
account  of  non-payment  of  the  attached  drafts  until  the  re- 
turn is  ordered  by  the  bank  from  which  received  for  col- 
lection, as  the  time  lost  in  reforwarding  the  documents  may 
cause  damage  to  a  shipment  and  loss  to  the  bank. 

Other  Collections 

Having  disposed  of  all  notes  and  all  bill-of-lading  drafts 
received,  the  bulk  of  the  collections  have  yet  to  be  cared 
for.  Many  items  are  received  each  day  which  are  paid  upon 
presentation  and  then  either  remitted  for  or  credited  to  the 


84  Modern  Banking  Methods 

depositors'  accounts.  Many  items  are  received  with  in- 
structions not  to  protest  for  non-payment  and  which, 
dishonored  upon  presentation  to  the  drawees,  are  at  once 
returned  to  the  senders.  For  many  others,  notices  are 
mailed  to  the  drawees  or  presentation  is  made  and  notices 
are  left.  These  drafts  are,  as  a  rule,  held  for  from  three  to 
five  days  and,  if  not  paid,  are  then  returned  to  the  senders. 

There  is  seldom  any  inquiry  from  the  senders  regarding 
such  collections  until  after  the  collections  have  been  disposed 
of.  No  permanent  record  of  them  need  be  kept  at  the  Col- 
lection desk,  the  Collection  teller's  "Paid"  or  "Returned 
Unpaid"  stamp  on  the  incoming  letters  being  sufficient  record. 

Temporary  record  of  these  items  is  conveniently  kept 
by  use  of  a  blue  pencil  and  a  clamp  file.  The  collection 
teller  marks  in  blue  pencil,  upon  the  upper  right  hand  corner 
of  every  such  letter,  consecutive  collection  numbers,  com- 
mencing each  day  with  number  "11".  Upon  the  upper  right 
hand  corner  of  every  item  received  with  the  letter,  he  places 
the  same  collection  number.  Numbers  "1"  to  "10"  are  used 
for  items  subject  to  protest  and  for  those  which  require 
telegraphic  advice  of  payment.  The  messengers  record 
these  various  numbers  from  the  items  into  their  collection 
books  and  on  the  notices  which  are  presented  or  mailed  to 
the  drawees  and  use  them  for  identification  in  reporting 
payments. 

An  item  for  $100,  bearing  the  number  "16",  is  returned 
unpaid.  The  Collection  teller  removes  from  his  clamp  file 
letter  number  "16",  which  he  finds  to  call  for  one  draft  of  $100; 
he  imprints  his  "Returned  Unpaid"  stamp  upon  the  letter 
and  gives  the  letter  and  the  dishonored  draft  to  an  assistant, 
by  whom  the  draft  is  returned  to  the  depositor  and  the 
letter  initialed  and  sent  to  the  general  files.  Letters  con- 
taining more  than  one  item  are  returned  to  the  clamp  file 
so  long  as  they  contain  any  unsettled  items. 

The  Collection  teller  receives  from  one  of  the  messengers 
$55.10  in  payment  for  collection  "78".  He  extracts  from  his 
clamp  file  the  letter  which  was  numbered  "78"  and  finds  that 
the  letter  calls  for  a  $55  draft.  A  blue  pencil  memorandum 
was  made  by  him  on  the  letter  when  it  was  received,  to  the 


The  Collection  Teller  85 

effect  that  lOc  was  to  be  collected  for  exchange.  He  now 
stamps  the  letter  "Paid",  makes  out  an  application  for  a 
$55  draft  in  payment  for  the  collection  and  records  on  the 
application  the  fact  that  lOc  is  to  be  credited  to  "Collection 
Desk  Exchange".  He  gives  the  $55.10  and  the  application 
for  exchange  to  an  assistant  for  record  in  the  blotter. 

Collections  Outstanding  Only  a  Few  Days 

At  the  close  of  banking  hours,  the  Collection  teller  has 
in  his  possession  those  collections  for  which  notices  have 
been  left  by  messenger  or  mailed  but  which  have  not  been 
paid  and  payment  of  which  has  not  been  refused.  He  also 
has  on  his  clamp  file  the  letters  which  were  received  with 
these  collections.  He  arranges  the  collections  in  numerical 
order  and  compares  them  with  the  letters,  to  ascertain  that 
no  items  have  been  lost.  He  removes  the  letters  from  the 
clamp  file  and  files  them  in  numerical  order,  with  other  outstand- 
ing letters  received  during  the  previous  few  days,  in  an 
"Outstanding  Letters"  file.  He  places  the  drafts  in  alpha- 
betical order,  each  day's  drafts  being  kept  separate.  The 
teller  never  has  at  his  desk  at  one  time  more  than  five  days' 
drafts,  as  he  each  day  returns  to  the  senders  all  drafts  from 
the  five-day  file  and  all  drafts  from  the  three-day  file  except 
those  drawn  at  one  or  three  days  sight  and  those  for  which 
notices  were  mailed  to  the  drawees.  Drafts  paid  for  or 
ordered  returned  during  these  few  days  are  removed  from 
the  outstanding  file,  together  with  the  corresponding  collec- 
tion letters,  and  are  handled  in  the  same  manner  as  though 
they  had  been  settled  for  on  the  date  upon  which  they  were 
received  in  the  bank.  If  desired,  the  filing  arrangement  can 
be  reversed :  all  drafts  placed  alphabetically  in  one  file  instead 
of  in  five  and  the  outstanding  letters  filed  numerically  in  five 
separate  sets  of  letters  instead  of  in  one. 

During  the  few  days  such  a  collection  is  outstanding,  it 
can  be  readily  located  by  collection  number  or  by  name  of 
drawee.  After  the  transaction  is  closed,  the  record  is  avail- 
able from  the  general  letter  files  under  the  name  of  the  bank 
or  firm  from  which  the  collection  was  received. 


86  Modern  Banking  Methods 

Collection  Desk  Drafts 

Coin  or  currency  should  never  be  exchanged  between  tellers. 
Coin  or  currency  transactions  within  the  bank  should  be  only 
with  the  Vault  teller.  The  Collection  teller  must  buy  drafts 
from  the  Exchange  teller.  He  must  make  payment  to  the  Note 
teller  for  collections  which  he  has  made  for  the  Note  teller.  All 
checks,  coin  and  currency  received  by  the  Collection  teller  should 
be  recorded  in  his  own  blotter,  so  that  he  can  be  held  responsible 
for  all  funds  which  he  has  received.  Arrangements  must  be 
made  whereby  these  transfers  to  the  Exchange  teller  and  to  the 
Note  teller  can  be  made  without  the  use  of  coin  or  currency. 
The  headings  "Debit  Collection  Desk  Drafts"  on  the  credit  side 
of  the  Exchange  teller's  blotter  and  "Credit  Collection  Desk 
Drafts"  on  the  debit  side  of  the  Collection  teller's  blotter  repre- 
sent such  an  arrangement.  The  Exchange  teller  lists  on  his 
blotter  under  this  heading  all  of  the  Collection  teller's  applications 
for  exchange.  With  this  exception,  he  handles  them  in  the  same 
manner  as  those  from  other  sources.  The  Collection  teller, 
before  giving  them  to  the  Exchange  teller,  lists  them  on  the 
debit  side  of  his  blotter  under  the  heading  "Credit  Collection 
Desk  Drafts".  The  Collection  teller's  applications  for  exchange 
should  be  on  paper  of  a  distinctive  color. 

The  General  Balance  Sheet  will  never  show  a  balance  under 
the  heading  "Collection  Desk  Drafts"  because  each  day's  debits 
will  always  offset  the  credits  for  the  same  day.  By  carrying  these 
headings  on  the  recapitulation  of  the  tellers'  blotters  below  the 
subtotals  "Total  Deposits"  and  "Total  Checks",  the  transactions 
between  tellers  may  be  entirely  ignored  in  making  up  the  daily 
records  in  the  General  Cash  Book. 

Note  Desk  Collections 

The  method  of  transferring  funds  to  the  Note  teller  in 
payment  for  collections  made  for  him  will  vary  according  to  the 
number  of  transfers.  If  there  are  only  a  few  such  transfers, 
they  may  be  effected  by  the  issuance  of  Cashier's  Checks  payable 
to  the  Note  teller.  It  may  be  preferred  that  any  amounts  col- 
lected be  credited  by  the  Collection  teller  direct  to  Bills  Receiv- 
able. If  there  are  many  collections  for  the  Note  teller,  an  account 


The  Collection  Teller  87 

"Note  Desk  Collections"  similar  to  the  account  "Collection  Desk 
Drafts"  might  be  used. 

Collection  Desk  Exchange 

The  bank's  records  should  clearly  show  the  Collection 
department's  net  loss  or  profit,  the  Exchange  department's 
net  profit  or  loss,  the  net  cost  of  the  Transit  department  and 
similar  facts.  To  make  possible  this  segregation  of  losses 
and  profits,  the  Collection  teller  must  pay  the  Exchange  teller 
full  premium  value  for  all  exchange  purchased.  This  pay- 
ment may  be  in  the  form  in  a  daily  credit  to  Domestic 
Exchange  through  the  Collection  teller's  blotter.  All  funds 
received  by  the  Collection  teller  in  payment  for  collection  charges 
or  exchange  premiums  should  be  listed  by  him  on  the 
debit  side  of  his  blotter  under  the  heading  "Collection  Desk 
Exchange".  Transit  checks  drawn  on  cities  with  which 
accounts  are  carried  for  exchange  purposes  and  debits 
or  credits  to  Exchange  banks  should  be  listed  on  the  Col- 
lection teller's  blotter  under  the  usual  headings  but  should 
in  each  case  be  under  a  special  sub-heading  "Exchange  Banks". 
From  the  totals  under  these  sub-headings,  the  amount  of 
Domestic  Exchange  due  to  the  Exchange  department  for 
drafts  purchased  during  the  day  can  be  readily  computed. 
The  total  under  the  heading  "Collection  Desk  Exchange"  is 
then  subdivided  and  carried  to  the  recapitulation  of  the 
Collection  teller's  blotter  in  two  divisions,  "Credit  Domestic 
Exchange"  and  "Credit  Collection  Desk  Exchange." 

If  the  total  on  the  debit  side  of  the  blotter  under  the 
"Exchange  Banks"  sub-division  of  "Individual  Credits"  is 
$1000  and  the  total  under  the  heading  "Credit  Collection 
Desk  Drafts"  is  $22,000  and,  on  the  credit  side  of  the  blotter, 
the  "Exchange  Banks"  subdivision  of  "Debit  Transit  Ac- 
count" shows  a  total  of  $3000,  then  the  difference  between  the 
total  of  the  first  two  amounts  and  the  third  amount  is  the  net 
exchange  purchased  during  the  day,  $20,000.  The  current 
rates  for  exchange  are  say,  3c.  for  Mail  and  5c  for  Telegraphic. 
For  the  $20,000  of  exchange  purchased,  the  Collection  teller 
must  pay  $6.  Under  the  "Exchange  Banks"  subdivision  of 
"Individual  Checks",  it  is  found  that  $4000  has  been  debited 


88  Modern  Banking  Methods 

to  Exchange  banks.  This  $4000  is  better  than  telegraphic 
exchange  because  it  has  been  earning  interest  while  credit 
advices  from  the  Exchange  banks  were  in  the  mails.  At  the 
telegraphic  rate  of  exchange,  it  has  a  premium  value  of  $2. 
This  leaves  a  balance  to  be  credited  "Domestic  Exchange" 
of  $4. 

Collection  Teller's  Blotter 

Credits  and  debits  on  the  Collection  teller's  blotter  may 
be  written  up  and  balanced,  a  portion  ("write-up")  at  a 
time,  in  the  same  manner  that  deposits  and  checks  are  written 
and  proved  for  the  Receiving  teller.  The  items  are  more 
varied,  however,  and  there  are  not  so  many  of  them.  It  is 
usually  preferred  to  record  them  a  few  at  a  time,  the  listing 
of  each  set  of  items  being  proved  before  the  items  are  sent 
out. 

The  blotter  will  show  results  about  as  follows: 

Recapitulation  of  Collection  Teller's  Blotter 

Dr.  Cr. 

Credit  Accounts  as  Follows:  Debit  Accounts  as  Follows: 

General    Ledger    Credits   $    4,930  General   Ledger    Checks    $  15,000 

Domestic  Exchange  4  ~,  <,  -^ 

„  „  „     ,    _  ,-  Transit    Account     -       -          3,500 

Collection  Desk  Exchange          16 

City  Cash  Collections  -        73,000  City   Cash   Collections     -        none 

Total   General   Ledger   $  77,950  Total   General   Ledger  $  18,500 

Individual    Deposits       -        50,000  Individual     Checks    -      -      20,000 

Total  Deposits  -     $127,950  Total    Checks       -      - 

Collection  Desk  Drafts       22,000  £  ^  af?rin?  ~ 

P.     M.     Clearing     -        - 

Coin  and  Currency  Coin  and  Currency 

from  Vault  50  to  Vault 


$150,000  $150,000 


CHAPTER  XIV 
THE  NOTE   TELLER 


The  Note  teller  has  less  direct  communication  with  the 
other  tellers,  the  bookkeepers,  the  Clearing  House  depart- 
ment and  the  Transit  department  than  has  any  other  teller. 
The  number  of  items  which  reach  these  departments  from 
the  Note  teller  is  comparatively  small.  As  long  as  the  items 
reach  the  departments  within  a  reasonable  time  after  the 
close  of  banking  hours  and  as  long  as  the  blotter  is  ready 
in  time  for  the  final  summary  of  tellers'  blotters,  the  other 
clerks  and  tellers  have  little  occasion  for  dealings  with  the 
Note  teller. 

On  the  other  hand,  the  Note  teller  is  in  constant  com- 
munication with  the  bank's  officers.  Every  transaction  which 
he  handles  passes  under  their  direct  observation.  It  is 
through  the  Note  department  that  the  bulk  of  the  bank's 
income  is  produced.  A  small  portion  is  earned  by  the  Ex- 
change department;  the  Collection  department  sometimes 
charges  heavily  enough  to  cover  its  actual  costs;  the  Transit 
department  is  a  necessary  evil  and  a  source  of  much  loss; 
the  Paying  teller  is  a  necessary  adjunct  to  deposit  accounts; 
the  Receiving  and  In-Mail  tellers  must  take  in  the  deposits 
before  the  funds  can  be  loaned;  but  all  of  these  departments 
point  to  the  Note  teller.  The  duty  of  all  of  them  is  to  per- 
form those  necessary  functions  which  shall  induce  depositors 
to  deposit  and  to  leave  with  the  bank  those  funds  which 
are  later  loaned  through  the  Note  department. 

Notes  and  Discounts 

Loans  are  made  in  different  forms.  A  depositor  holding 
an  out-of-town  check  obtains  the  funds  from  the  Receiving 
teller  through  Transit  Account  before  the  check  is  paid.  The 
operation  is  so  simple  that  he  seldom  realizes  he  is  obtaining 


90  Modern  Banking  Methods 

a  loan.  Out-of-town  drafts  and  accepted  drafts  may  be 
handled  in  the  same  manner  but  are  usually  recognized  as 
loans  and  the  funds  advanced  by  the  Note  teller.  Whatever 
form  a  loan  takes  it  must  be  that  of  a  negotiable  instrument 
as  defined  in  the  Negotiable  Instruments  Act.  "It  must  be  in 
writing  and  signed  by  the  maker  or  drawer ;  must  contain 
an  unconditional  promise  or  order  to  pay  a  sum  certain  in 
money;  must  be  payable  on  demand,  or  at  a  fixed  or  deter- 
minable  future  time;  must  be  payable  to  order  or  to  bearer; 
and,  where  the  instrument  is  addressed  to  a  drawee,  he  must 
be  named  or  otherwise  indicated  therein  with  reasonable 
certainty." 

All  loans  through  the  Note  teller  may  be  debited  to  one 
General  Ledger  account  entitled  "Bills  Receivable"  or  "Loans 
and  Discounts".  For  convenience  in  auditing  the  interest  on 
these  loans,  it  may  be  desirable  to  divide  them  on  the 
ledger  into  "time  bills"  and  "demand  bills".  A  division  made 
in  reports  to  the  Government  is  "one-name  paper"  and  "two- 
name  paper"  but  such  a  division  on  the  General  books  is  not 
necessary.  Still  another  division  is  into  "secured  loans"  and 
"unsecured  loans".  Let  us  assume  that  all  loans  are  carried 
in  the  one  account,  "Bills  Receivable." 

A  Cashier's  Check  should  be  issued  for  each  loan  made. 
In  exchange  for  a  $1,000  note  which  one  of  the  officers  has 
marked  "O.K"  and  initialed,  the  Note  teller  issues  a  Cashier's 
Check  for  $1000.  He  debits  "Bills  Receivable"  and  credits 
"Cashier's  Checks"  this  amount.  An  acceptance  for  $2500, 
bearing  6%  interest,  payable  in  sixty  days,  is  presented  for 
discount.  Deducting  $25  for  interest,  the  Note  teller  issues  a 
Cashier's  Check  for  $2475.  He  debits  "Bills  Receivable" 
$2500,  credits  "Cashier's  Checks"  $2475  and  credits  the 
remaining  $25  to  "Interest  on  Loanable  Funds." 

Discount  Blotter 

A  record  of  loans  made  must  be  kept  and  its  total  each 
day  debited  to  Bills  Receivable.  A  Note  Tickler  must  be  kept 
with  all  time  loans  posted  under  their  due  dates.  The  "Dis- 
count Blotter",  a  bound  book  with  one  double-page  opening 
for  each  day's  record,  serves  both  these  purposes  and  also 
that  of  blotter  for  the  Note  teller.  Loans  made  are  recorded 


The  Note  Teller  91 

on  the  credit  side.  All  loans  are  posted  from  this  record  to 
the  Note  ledger.  Time  loans  are  also  posted  forward  to  the 
debit  side  of  the  Discount  Blotter  on  the  pages  for  the  due 
dates.  All  items  coming  due  on  one  date  are  thus  listed  on 
one  page,  the  Discount  Blotter  serving  as  a  Note  Tickler. 
The  Note  teller  files  under  their  due  dates  those  notes  and 
acceptances  which  represent  time  loans.  He  extracts  them  from 
his  files  on  the  due  date  and  compares  them  with  the  Note 
Tickler,  collecting  the  items  and  using  the  Note  Tickler  as 
a  list  of  time  loans  paid.  Demand  loans  paid  during  the  day 
are  listed  immediately  below  the  time  loans.  At  the  end  of 
the  day,  a  footing  is  obtained  showing  total  loans  paid  and 
this  amount  is  credited  Bills  Receivable.  The  Note  teller 
records  all  cash  transactions  in  the  Discount  Blotter:  loans 
paid,  interest  received,  total  Cashier's  Checks  issued  et  cetera,  on 
the  debit  side;  loans  made,  checks,  "Coin  and  Currency  to 
Vault"  et  cetera,  on  the  credit  side. 

Loose  Leaf  Records 

The  record  of  loans  made  need  not  be  kept  in  the  Dis- 
count Blotter.  It  may  be  in  a  separate  bound  book  or  it 
may  be  on  loose  leaf  sheets.  If  a  sheet  were  lost,  the  record 
could  be  replaced  by  reference  to  the  Cashier's  Checks  and 
to  the  teller's  blotter.  Labor  can  be  saved  by  incorporating 
the  record  of  loans  made  in  the  Cashier's  Checks  Register, 
which  consists  of  loose  leaf  sheets.  These  sheets  are  filed 
with  the  auditors  as  soon  as  filled  in  and  there  would  be 
little  danger  of  a  sheet  being  lost  or  altered.  It  is  better, 
however,  to  record  the  notes  after  the  loans  have  been  made, 
so  as  to  ensure  the  receipt  of  the  note  or  accepted  draft  for  each 
loan  and  to  ensure  a  correct  record  of  the  items. 

The  Note  Tickler  need  not  be  incorporated  in  the  Dis- 
count Blotter.  The  sheets  can  be  filed  in  a  loose  leaf  binder, 
one  sheet  for  each  day's  record.  The  sheets  will  still  be  used 
as  a  record  of  loans  paid,  only  the  daily  totals  being  carried 
to  the  teller's  blotter.  Loans,  in  some  banks,  are  made  by 
the  Note  and  Discount  tellers  and  collected  by  the  Collection 
teller.  With  such  an  arrangement,  the  sheet  from  the  Note 
Tickler  could,  each  day,  be  transferred  to  the  Collection 
teller,  together  with  the  notes  then  due,  and  possibly  used 


92 


Modern  Banking  Methods 


by  the  Collection  teller  and  the  General  bookkeeper  as  a 
deposit  tag  from  which  to  credit  the  payments  to  Bills  Re- 
ceivable. If  any  sheet  were  lost  or  altered,  the  facts  to 
replace  the  day's  record  could  be  obtained  from  the  record  of 
loans  made  or  from  the  Discount  Ledger  or,  partially,  from 
the  Cashier's  Checks  or  the  teller's  blotter. 

Note  Teller's  Blotter 

The  Note  teller  must  list  his  checks  on  a  blotter  sheet 
such  as  is  used  by  the  other  tellers  and  must  fill  in  the 
recapitulation  form  in  the  lower  corner  of  the  sheet.  This 
sheet  is  needed  to  preserve  the  uniformity  of  the  tellers' 
blotters  and  in  making  up  the  Summary  of  All  Tellers'  Blotters. 
Retention  of  the  Bound  Discount  Blotter  means  double  listing  of 
the  checks;  on  the  other  hand,  comparison  of  the  two  sets  of 
totals  may  facilitate  the  balancing  of  the  blotters.  The 
figures  in  the  recapitulation  form  will  be  partially  a  copy 
from  the  Discount  Blotter,  whereas  all  of  the  other  tellers' 
blotters  are  original  records.  Use  of  the  Discount  Blotter 
can  be  discontinued  if  the  record  of  loans  made  and  the 
record  of  loans  paid  are  kept  on  separate  forms.  The  blotter, 
when  completed,  will  show  facts  about  as  follows : 

Recapitulation  of  Note  Teller's  Blotter 


Dr. 
Credit  Accounts  as  Follows: 

Bills  Receivable   (*)    -  $115,000 

Cashier's    Checks  -      -  181,000 
Interest  on  Loanable 

Funds  3,970 

Total  General  Ledger  $299,970 

Total  Deposits    -      -  $299,970 


Cr. 
Debit  Accounts  as  Follows: 

General  Ledger  Debits  -    $    5,000 
Bills  Receivable  -    -      -      200,000 

Transit    Account    -      -  1,500 


Coin  and  Currency 

from  Vault 


30 


$300,000 


Total  General  Ledger  $206,500 

Individual  Checks  -      -  85,000 

Total  Checks  -    -    -  $291,500 

A.   M.   Clearing  -      -  750 

P.    M.    Clearing   -      -  7,500 
Coin  and  Currency 

to  Vault  250 

$300,000 


(*)The  credit  to  Bills  Receivable  is  listed  as  a  separate  item  when  the  Discount 
Blotter  is  used.  If  the  Note  Tickler  sheet  be  used  as  a  credit  tag,  the  amount 
will  be  listed  as  a  credit  to  General  Ledger  Deposits. 


The  Note  Teller  93 

Note  Ledger 

Bound  books  were  at  one  time  considered  essential  for 
Note  Ledgers.  Experience  has  shown  that  loose  leaf  or  card 
ledgers  are  entirely  safe  and  much  more  convenient.  There 
is  no  necessity  for  repeated  opening  of  new  ledgers;  the 
ledgers  do  not  contain  dead  accounts;  accounts  can  be  kept 
in  alphabetical  order.  The  difference  between  loose  leaf  ledgers 
and  card  ledgers  is  one  of  convenience  in  handling.  If  frequent 
entries  are  to  be  made  in  many  different  accounts,  the  loose- 
leaf  book  is  more  convenient  but,  if  only  an  occasional  account 
is  to  be  referred  to,  the  cards  are  preferable. 

There  is  little  uniformity  among  banks  in  the  ledger 
pages.  Each  card  or  page  should  provide  for  a  record  of  the 
essential  facts  regarding  one  borrower's  loan  account:  the 
date  and  amount  of  increase  or  decrease,  the  balance,  the 
amount  for  which  liable  as  endorser  and  any  change  in  this 
liability,  the  interest  rate,  security  et  cetera.  Different  forms  or 
different  sections  of  the  ledger  may  be  used  to  separate  time 
and  demand  loans. 

Securities 

A  record  must  be  kept  of  stocks,  bonds  and  other  secur- 
ities held  as  collateral.  The  work  of  keeping  this  record  and 
the  custody  of  the  securities  may  be  assigned  to  the  Note 
teller  or  to  a  Securities  teller  or  may  be  under  direct  super- 
vision of  an  officer  of  the  bank. 

A  "Collateral  Securities  Ledger"  must  be  kept.  This 
ledger  should  have  one  page  or  card  for  each  account  and 
this  page  or  card  should  provide  for  a  record  of  the  date 
received,  the  date  returned,  the  name,  the  number,  the  par 
value  and  the  date  of  maturity  of  each  bond  received  by  the 
bank  as  security  or  for  safe  keeping.  The  bond  number  is 
important  for  identification  by  the  auditor  or  in  case  of  loss. 
Each  stock  certificate  should  be  recorded  in  the  ledger  with 
the  date  received,  the  date  returned,  the  number  of  the  certificate, 
the  number  of  shares,  the  name  of  the  corporation  and  possibly 
the  face  value  and  the  market  value. 


94  Modern  Banking  Methods 

Various  arrangements  have  been  made  for  the  safe  cus- 
tody of  securities.  None  seem  yet  to  have  proved  invulner- 
able. The  bank  owes  it  to  its  employees  to  remove  all  unneces- 
sary temptations;  every  possible  safeguard  should  be  placed 
around  the  handling  of  the  money,  of  the  credits  and  of  the  se- 
curities. Receipts  should  be  issued  for  all  securities  taken  in  and 
carbon  copies  of  these  receipts  retained.  The  duplicate  receipts 
should  bear  consecutive  numbers  when  obtained  from  the  printers, 
in  order  that  every  receipt  form  may  be  accounted  for.  The  origi- 
nal receipts  should  be  recovered  from  the  borrowers  and  the  car- 
bon copies  cancelled  when  the  securities  are  surrendered.  The 
copies  of  outstanding  receipts  will  then  at  all  times  tally  with  the 
securities  held  by  the  bank. 

As  an  additional  safeguard  "double  custody"  may  be  pro- 
vided, in  which  case  the  securities  are  kept  in  a  safe  with  two 
combinations.  For  all  securities  taken  from  or  placed  in  the 
vault,  a  record  must  be  signed  by  the  two  employees  opening 
the  combinations,  showing  that  one  of  them  made  a  certain 
change  in  the  contents  of  the  safe  and  that  the  other  wit- 
nessed the  transaction.  For  further  protection,  the  auditors 
may  each  day  compare  the  entries  in  this  book  with  the  stubs 
in  the  receipt  book. 

Coupon  Tickler 

A  tickler  of  some  sort  must  be  kept  to  indicate  the  due 
dates  of  coupons,  the  expiration  dates  of  insurance  policies 
and  like  information,  so  that  each  requirement  shall  have 
attention  at  the  proper  time.  For  this  purpose  a  card  file  with 
cards  appropriately  ruled  and  printed  is  very  convenient. 


CHAPTER  XV 


THE  GENERAL  BOOKS 


Every  bank  must  keep  records  showing  the  fluctuations 
in  its  resources  and  liabilities.  Resources  may  consist  of: 
"Bills  Receivable"  or  "Loans  and  Discounts",  "Coin  and  Cur- 
rency in  Vault",  "Bonds  Owned",  "Overdrafts",  "Due  from 
Banks",  "Transit  Account"  et  cetera.  Liabilities  may  consist  of : 
"Capital",  "Surplus  Fund",  "Profit  and  Loss",  "Bank  De- 
posits", "General  Deposits",  "Certified  Checks",  "Cashier's 
Checks",  "Certificates  of  Deposit"  et  cetera.  The  total  resources 
must  each  day  balance  with  the  total  liabilities.  The  division 
of  the  books  in  which  these  accounts  are  kept  is  called  the 
"General  Ledger". 

Character  of  General  Ledger  Entries 

Some  of  the  transactions  in  these  accounts  reach  the 
General  books  in  the  form  of  office  credits,  some  in  the  form 
of  checks  or  drafts  signed  by  the  bank's  officers,  some  in  the 
form  of  expense  vouchers.  Others,  such  as  debits  and  credits 
to  "Bills  Receivable"  and  credits  to  "City  Cash  Collections" 
and  to  some  of  the  sub-divisions  of  "Profit  and  Loss  Ac- 
count", are  carried  to  the  General  books  direct  from  the  Sum- 
mary of  All  Tellers'  Blotters.  The  totals  for  credits  to  "In- 
dividual Checks",  "City  Cash  Collections",  "Transit  Account", 
"A.  M.  Clearing",  "P.  M.  Clearing"  and  "Coin  and  Currency 
to  Vault"  are  all  conveniently  located  on  the  tellers'  blotters 
but  these  entries  should  not  be  made  in  the  General  books 
from  the  blotters. 

Departments'  Totals  Verified  to  Tellers'  Totals 

After  the  original  items  have  left  the  tellers,  independent 
records  of  them  are  made  by  the  various  departments : 


96  Modern  Banking  Methods 

Interior  Proving,  Collection,  Transit,  Clearing  House  and 
Vault.  The  records  for  each  department  must  each  day  be 
totaled  and  the  totals  balanced  with  the  totals  on  the  tellers' 
blotters.  Someone  from  each  department  should  be  required 
to  each  day  initial  his  department's  total  on  the  Summary  of 
All  Tellers'  Blotters  to  indicate  that  he  has  found  the  totals 
to  agree.  The  General  bookkeeper  should  be  required  to 
make  his  entries  from  the  departments'  records  rather  than 
from  the  tellers'  blotters.  The  balancing  of  the  departments 
with  the  tellers  is  all  important.  Systems  under  which  one 
department  or  one  clerk  checks  the  work  of  another  are  not 
complete  until  the  checking  is  compulsory.  The  most  ef- 
fective means  for  obtaining  accuracy  is  to  provide  that 
inaccuracy  must  throw  someone  out  of  balance.  The  tellers' 
work  is  accurate  because  their  blotters  must  balance.  The 
depositors'  balances  in  the  bookkeepers'  ledgers  are  accurate 
because  the  ledgers  must  balance.  Requiring  the  General 
bookkeeper  to  make  his  entries  in  the  General  books  from 
the  departments'  records  makes  the  balancing  of  the  depart- 
ments' records  with  the  tellers'  blotters  compulsory.  Any 
inaccuracy  in  the  totals  will  throw  the  General  books  out  of 
balance.  The  departments  must  balance  with  the  tellers  be- 
fore the  General  books  can  balance.  Carelessness  in  any 
department  in  the  comparison  of  its  totals  with  the  tellers' 
totals  cannot  result  in  the  records  being  allowed  to  remain 
out  of  balance. 

The  requirement  is  made  practicable  through  the  con- 
venient manner  in  which  the  tellers'  blotters  are  consolidated. 
If  the  General  bookkeeper's  records  are  thrown  out  of  balance 
through  inaccuracy  in  one  of  these  departments,  he  can 
locate  the  difference  in  a  moment  by  reference  to  the  tellers' 
blotters.  The  Summary  of  All  Tellers'  Blotters,  attached  to 
and  a  part  of  the  volume  of  tellers'  blotters  for  the  day,  shows 
one  total  each  for  Individual  Deposits,  Individual  Checks, 
City  Cash  Collections,  Transit  Account,  A.  M.  Clearing, 
P.  M.  Clearing,  Coin  and  Currency  to  Vault,  and  Coin  and  Cur- 
rency from  Vault.  The  Summary  is  balanced  before  it  is 
delivered  to  the  General  bookkeeper.  In  addition  to  totals  to 
which  each  department  must  balance,  the  Summary  contains 


The  General  Books  97 

debit  and  credit  totals  to  which  the  General  Cash  Book  must 
balance  and  subtotals  which  may  be  used  in  obtaining  a  pre- 
liminary balance  of  the  General  Cash  Book  before  the  book- 
keepers' figures  are  received.  The  General  bookkeeper  is  not 
obliged  to  assemble  the  tellers'  figures  or  to  locate  errors  which 
the  tellers  have  overlooked.  Before  the  blotters  are  delivered 
to  the  General  bookkeeper,  the  figures  from  the  various  tellers 
are  consolidated  by  the  tellers  and  proved  and  the  blotters  stapled 
together. 

Bookkeepers'  Reports  of  Daily  Totals 

The  General  bookkeeper  is  usually  placed  in  charge  of 
the  Bookkeeping  department  because  he  must  be  an  experi- 
enced accountant  and  because,  while  all  other  departments 
consolidate  their  own  figures  on  their  own  records,  he  usually 
consolidates  the  bookkeepers'  figures.  Each  bookkeeper 
initials  the  Interior  Proving  department's  records  showing 
his  individual  totals  for  checks  paid  and  for  deposits.  The 
recapitulations  of  these  totals  on  the  Interior  Proving  depart- 
ment's records  may  be  used  by  the  General  bookkeeper 
instead  of  requiring  a  separate  consolidation  of  these  figures 
by  the  bookkeepers. 

Total  Credit  Balances  and  total  Overdrafts  are  con- 
solidated under  the  General  bookkeeper's  supervision.  When 
there  are  several  bookkeepers,  best  results  are  obtained  by 
requiring  all  the  bookkeepers  to  report  these  figures  each  day 
on  one  form.  This  form  may  be  headed  "Bookkeepers'  Daily 
Totals"  and  should  provide  separate  columns  for  "Net  De- 
crease in  Balances",  "Net  Increase  in  Balances",  "Total  Over- 
drafts" and  "Total  Credit  Balances",  together  with  a  hori- 
zontal line  for  the  figures  of  each  bookkeeper,  the  lines 
numbered  to  correspond  with  the  bookkeepers'  ledger 
numbers.  After  each  bookkeeper's  figures  have  been  placed 
on  the  form,  they  should  be  verified  by  another  bookkeeper 
and  initialed.  The  totals  of  these  figures  can  be  proved  in 
a  few  moments.  The  difference  between  the  footings  of  the 
first  two  columns  should  equal  the  difference  between  total 
checks  and  total  deposits  as  shown  by  the  Interior  Proving 
department's  records.  The  difference  between  "Total  Credit 


98  Modern  Banking  Methods 

Balances"  and  "Total  Overdrafts"  of  the  current  day  and  of 
the  previous  day  should  also  equal  the  difference  between 
total  checks  and  total  deposits.  Provision  for  these  com- 
parisons should  be  made  on  the  first  portion  of  the  form. 
Separate  forms  for  the  reports  of  the  Bank  bookkeepers  and 
of  the  Individual  bookkeepers  will  result  in  separate  totals 
for  "Bank  Deposits"  and  for  "Individual  Deposits". 

Short  and  Over  Book 

When  no  differences  appear  in  a  bank's  records,  an 
Auditing  department  should  be  created  to  learn  by  what 
methods  the  differences  are  covered  up.  The  same  methods 
might  be  used  to  cover  defalcations.  It  is  no  crime  to  have 
differences  but  covering  them  up  should  be  treated  as  such. 
In  addition  to  unlocatable  differences  in  the  cash  and  dif- 
ferences caused  by  failure  to  pay  or  receive  odd  cents,  there 
are  temporary  bookkeeping  differences.  The  bank  closes  at 
3  p.  m.  One  of  the  tellers  is  still  out  of  balance  at  4  p.  m. 
He  should  close  up  his  blotter  showing  the  difference,  so  as 
not  to  detain  the  remainder  of  the  force.  He  should,  if 
possible,  locate  the  difference  later  and  correct  it  the  follow- 
ing day  by  use  of  properly  signed  vouchers.  In  like  manner, 
differences  in  the  various  departments  should  not  be  allowed 
to  unnecessarily  delay  the  General  bookkeeper.  The  records 
for  Transit  Account,  for  City  Cash  Collections,  for  P.  M. 
Clearing  et  cetera  should  be  closed  and  submitted  to  him 
not  later  than  5  p.  m.  Any  differences  not  located  by  that 
time  should  be  located  later  and  corrected  by  debit  and  credit 
through  the  tellers'  blotters. 

All  differences  must  be  recorded  by  the  General  book- 
keeper in  a  "Short  and  Over  Book".  If  desired,  the  net 
shorts  and  the  net  overs  for  a  given  period  may  be  shown 
for  each  teller  and  for  each  department,  together  with  the 
total  net  shorts  and  net  overs  for  the  period.  Shorts  and 
overs  should  be  kept  separate.  One  side  of  the  book  may  be 
devoted  to  short-cash  and  the  other  side  to  over-cash. 
Amounts  over  to  offset  previous  shortages  are  listed  in  red 
ink  on  the  "Short-Cash"  side  and,  when  carrying  the  amounts 
forward,  are  subtracted  from  the  total  shorts.  Amounts 
short  to  offset  previous  overs  are  treated  in  like  manner  on 


The  General  Books  99 

the  "Over-Cash"  side.  On  each  side  of  the  book  a  column  is 
provided  for  each  teller  and  for  each  department,  together 
with  a  column  for  the  date  and  one  for  description  of  dif- 
ferences. One  day's  work  may  occupy  one  horizontal  line 
or  it  may  require  a  dozen.  One  page  will  contain  the  record 
for  several  days.  The  final  net  totals  must  each  day  be  car- 
ried to  the  General  Balance  Sheet  as  "Short-Cash"  or  as 
"Over-Cash". 

Daily  Reports  to  Officers* 

Reports  should  be  submitted  to  the  officers  of  the  bank 
each  morning,  showing,  in  simple  and  complete  form,  all 
vital  facts  regarding  the  bank's  condition.  A  loose  leaf  book 
about  fifteen  inches  long  by  twelve  inches  wide  is  very  useful 
for  this  purpose.  There  can  be  several  divisions,  separated 
by  guides,  each  division  containing  one  page  for  each  day's 
report.  One  division  will  call  for  a  conveniently  arranged 
statement  of  resources  and  liabilities  together  with  informa- 
tion as  to  excess  legal  reserve  and  excess  loanable  funds. 
One  division  may  show  all  new,  re-opened  and  closed  ac- 
counts, another  all  overdrafts,  another  all  transactions  in  and 
balances  for  accounts  of  Exchange  Banks.  One  section  may 
contain  graphic  charts  with  the  figures  for  several  years  on 
one  sheet,  showing  the  fluctuations  in  deposits,  in  excess 
legal  reserve,  in  excess  loanable  funds,  in  loans  and  discounts 
et  cetera.  Charts  may  show  the  average  daily  number  of 
items  of  each  kind  handled  from  month  to  month,  the 
fluctuations  in  Expense  Account,  in  interest  rates,  in  income 
and  various  other  facts  of  interest. 

The  report  of  resources  and  liabilities  is  made  by  the 
General  bookkeeper.  It  may  be  copied  from  the  General 
Balance  Sheet  but  arranged  in  different  order  or  it  may  be  one 
of  his  original  records. 

Methods  for  General  Books 

For  the  Individual  bookkeepers  and  Bank  bookkeepers, 
the  Baker-Vawter  system,  with  one  loose-leaf  ledger  page 
for  each  account,  is  superior  to  the  old-time  bound  cash 
book  and  balance  sheet.  It  would  appear  that,  for  similar 

*See  illustration   on   following  page. 


100  Modern  Banking  Methods 

reasons,  loose-leaf  methods  should  be  best  for  the  General 
books:  adding  machine  lists  of  each  day's  debits  and  credits 
to  agree  with  the  tellers'  totals;  the  ledger  to  be  the  book 
of  original  entry  and  the  officers'  report  of  resources  and 
liabilities  to  be  made  from  the  ledger  and  to  serve  as  a  daily 
proof  of  the  ledger.  The  writer's  experience  has  been  con- 
fined to  bound  records  for  the  General  books.  The  tendency 
among  banks  is  to  be  conservative.  The  old-time  General 
books  consist  of  a  daily  Cash  Book,  a  Ledger  and  a  Balance 
Sheet.  These  are  standard  records.  Everybody  understands 
them.  Other  departments  may  experiment;  records  in  other 
departments  may  at  times  become  confused  but  it  must 
always  be  possible  to  go  back  to  the  General  books  and  to 
find  these  fundamental  records  intact.  They  form  the  foun- 
dation or  groundwork  for  all  other  records.  For  this  reason, 
little  progress  has  been  made  in  the  use  of  loose  leaf  records 
for  the  General  books.  If  a  loose  leaf  ledger  as  a  book  of 
original  entry  is  too  radical  for  the  General  books,  possibly 
a  bound  ledger  for  the  same  purpose  might  be  adopted.  It 
is  the  writer's  belief  that  the  present  cash  book  and  balance 
sheet  are  both  superfluous  records  and  that,  eventually,  their 
use  will  be  abandoned. 


I 

I 


The  First  National  Bank  of  San  Fram 
ASSETS 


.?,*£. 

7:-r?. 


DAILY    REPORTS   TO    OFFICERS 


BALANCE  SHEET         AUG>H»13 

LIABILITIES 


TOTAL  DEPOSITS  &/'/ 


TOTAL   LIABILITIES 


•XCtftS     LOANA3L 


DAILY  REPORTS  TO  THE  OFFICERS,  SHOWING  IN  SIMPLE  AND  COMPLETE 
FORM  ALL  VITAL  FACTS  REGARDING  THE  BANK'S  CONDITION,  ARE  DESIR- 
ABLE. LOOSE-LEAF  SHEETS  ARE  CONVENIENT  FOR  THIS  PURPOSE.  THE 
BANK'S  RECORDS  SHOULD  MAKE  SUCH  FACTS  READILY  AVAILABLE. 


APPENDIX 


GENERAL  INSTRUCTIONS  TO  BOOKKEEPERS 


A  copy  of  the  "General  Instructions  to  Bookkeepers" 
used  by  The  First  National  Bank  of  San  Francisco  is  given 
below.  At  first  glance  it  would  appear  rather  severe  to 
require  strict  adherence  to  such  a  mass  of  details.  In  prac- 
tice, it  is  found  that  nothing  more  is  required  of  the  men 
than  under  oral  instructions  and  that  written  instructions, 
furnishing  a  definite  knowledge  of  what  is  expected,  promote 
harmony  and  efficiency. 

The  Day's  Work 

actually  commences  at  8:30  a.  m.  with  the  writing  up  of  state- 
ments but,  from  the  viewpoint  of  work  handled,  may  be  con- 
sidered as  commencing  after  the  completion  of  the  statement  work, 
at  approximately  11  a.  m. 

Desk  Arrangements 

Each  bookkeeper  should  keep  on  his  desk  at  all  times 
between  9  a.  m.  and  4  p.  m.  (Saturdays  1  p.  m.)  his  current 
ledgers. 

A  case  containing  six  pigeon  holes  has  been  placed  on  the 
desk  of  each  bookkeeper  for  the  exclusive  purpose  of  enabling 
the  bookkeepers  to  keep  their  checks  and  deposits  at  all  times 
in  plain  view  of  themselves,  of  the  Interior  Proving  department 
and  of  the  General  bookkeeper.  The  first  three  and  last  of 
these  divisions  must  be  kept  clear  of  all  other  articles  and  must  be 
utilized  for  this  purpose  and  this  purpose  only. 

The  first  three  divisions  in  each  case  will  be  used  for 
deposit  tags  and  checks  delivered  by  the  Interior  Proving  depart- 
ment but  not  yet  entered  in  the  ledgers.  The  last  division  is 
to  be  used  only  for  checks  and  deposits  which  have  already 
been  listed  in  the  ledgers.  Checks  and  deposits  must  be  de- 
livered only  to  these  pigeon  holes. 

Checks  and  Deposits  Originate 

so  far  as  bookkeepers  are  concerned,  in  the  Interior  Proving  depart- 
ment. Each  bookkeeper  must  each  day  prove,  in  a  manner  indicated 
later,  that  the  totals  of  checks  and  of  deposits  received  by  him 
during  the  day  are  equal  in  amount  to  the  respective  totals 
charged  to  him  by  the  Interior  Proving  department. 


102  Modern  Banking  Methods 

The  Ledgers:  Alterations 

The  ledgers  are  books  of  original  entry.  No  steel  erasers, 
acids,  or  other  similar  implements  must  under  any  circumstances 
be  used  upon  the  ledgers.  All  records  must  remain  as  originally 
made,  with  the  exception  of  a  straight  line  drawn  through  in- 
correct amounts. 

When  the  proof  page  in  front  of  the  ledger  has  been  initialed 
by  the  bookkeeper  to  indicate  that  the  previous  day's  work  is 
in  balance,  all  records  to  that  point  are  closed  and  no  changes 
of  any  kind  may  be  made  except  by  means  of  new  entries 
through  the  tellers'  blotters.  Any  such  entries  must  receive  the 
auditor's  "O.K."  before  being  completed.  Exception  to  this 
rule  will  be  made  in  the  case  of  an  account  name  which  has  been 
carried  forward  incorrectly  by  the  bookkeeper.  Such  name  must 
be  corrected  and  the  "O.K."  of  an  auditor  at  the  same  time 
obtained,  no  voucher  being  required. 

Changes  in  account  names  for  any  other  reason  must  each  be 
made  by  a  regular  entry  through  a  teller's  blotter. 

The  Ledgers:  Army  Accounts 

Army  accounts,  such  as  Company  Fund,  Hospital  Fund, 
Troop  Fund,  etc.,  are  treated  by  us  in  a  manner  similar  to  that 
in  which  corporation  accounts  are  handled.  The  signing  officers 
for  such  an  account  may  change  but  the  account  remains  the 
same.  The  name  of  the  signing  officer  is  carried  on  the  ledger 
for  general  guidance  but  is  not  considered  a  part  of  the  title  of 
the  account.  It  is  merely  a  memorandum  and  may  be  changed 
from  time  to  time  under  verbal  instructions  from  the  Paying 
teller. 

Occasionally,  the  officer  in  charge  of  such  an  account  wishes 
to  transfer  by  check  the  balance  of  the  old  account  to  the  control 
of  another  officer.  In  such  a  case  the  officer's  name  on  the  old 
account  becomes  a  vital  part  of  the  title  of  the  account  and  a 
new  account  must  be  opened  with  the  new  officer's  name,  the 
closing  statement  being  rendered  to  the  original  signing  officer 
for  the  original  account. 

The  Ledgers:  Checks  in  Detail 

The  Ledgers  contain  lists  in  detail  of  all  checks  and  de- 
posits, together  with  the  daily  balances  to  the  credit  of  the 
various  depositors.  No  balance  need  be  carried  forward  except 
when  there  has  been  at  least  one  change  in  the  account  during 
the  day.  Balances  may  be  changed  oftener  when  it  will  facilitate 
the  work  of  the  bookkeeper. 

Separate  sheets  are  used  for  each  account  and  are  numbered 
consecutively  by  the  bookkeeper,  each  account  commencing 
with  sheet  number  "1". 


General  Instructions  to  Bookkeepers  103 

The  current  ledger  sheets  for  all  closed  accounts,  together 
will  all  transferred  sheets  for  the  same  accounts,  must  be  filed 
with  the  auditors  not  later  than  9  a.  m.  of  the  day  following 
that  in  which  the  accounts  are  closed. 

When  an  account  is  re-opened,  the  sheet  upon  which  the 
account  was  originally  carried  must  be  obtained  from  the  Audit- 
ing department  and  again  used. 

A  description  of  every  office  debit  or  orifice  credit  must  be 
placed  in  the  ledger,  in  the  "memo  column",  a  separate  line  to 
be  used  for  each  item.  Sufficient  explanation  must  be  given  to 
clearly  indicate  the  purpose  of  each  entry. 

The  totals  of  all  checks  must  be  listed  in  the  "total  checks" 
columns  of  the  ledgers;  whenever  there  are  two  or  more  checks 
for  one  account,  they  should  be  listed  first  in  the  "checks  in 
detail"  columns  and  only  the  total  carried  forward  to  the  "total 
checks"  column.  Whenever  the  amount  of  any  check  or  checks 
is  transferred  to  the  "total  checks"  column,  a  horizontal  line 
must  be  immediately  drawn  under  the  last  amount  in  the  "checks 
in  detail"  column.  For  purposes  of  identification,  the  date  of 
the  month  should  be  placed  before  the  first  item  each  day  in 
the  "checks  in  detail"  column.  "Check  lists"  may  be  used,  the 
checks  for  only  one  account  being  recorded  on  one  check  list 
sheet.  When  a  large  number  of  checks  are  paid  against  the 
account  of  one  firm,  one  of  these  sheets  is  inserted  in  the  adding 
machine  and  the  checks  are  listed  and  totaled.  The  list  is  then 
dated  and  the  total  carried  to  the  "total  checks"  column  of  the 
ledger,  together  with  the  letter  "1"  in  the  "memo"  column  to 
indicate  that  it  represents  a  list.  One  "check  list"  sheet  may 
be  used  for  several  days'  work  and  is  filed  alphabetically  with 
the  transferred  ledger  sheets  when  filled  or  whenever  the  sheet 
to  which  the  totals  have  been  posted  is  transferred.  The  check- 
list sheets  and  the  ledger  sheets  must  be  numbered  consecutively. 
A  number  used  for  a  check  list  sheet  must  not  be  duplicated 
on  a  ledger  sheet  for  the  same  account. 

A  "plug"  is  a  thin  piece  of  cardboard  three  inches  long  and 
a  half  inch  wide.  Each  bookkeeper  has  a  supply  of  green  and 
of  pink  "plugs".  Their  use  is  optional.  It  is  recommended  that 
in  entering  checks  or  deposits  in  the  ledgers  the  balances  be 
changed  for  all  accounts  in  which  changes  are  not  expected  to 
again  occur  during  the  day  and  that  a  green  plug  be  placed  in 
front  of  every  such  account.  Pink  plugs  can  be  used  to  indicate 
any  balances  which  are  not  yet  changed.  Throughout  the  day 
green  plugs  will  gradually  be  substituted  for  pink  ones  and  at 
the  close  of  business  only  a  few  accounts  will  remain  upon 
which  the  records  have  yet  to  be  completed.  Some  bookkeepers 
ignore  the  colors,  placing  the  plugs  in  the  bottom  part  of  the 
ledgers  until  the  balances  have  been  changed  and  then  trans- 


104  Modern  Banking  Methods 

ferring  them  to  the  top.  Balances  must  not  be  changed  before 
1:45  p.  m.  unless,  besides  doing  this  extension  work,  the  C.H. 
checks  are  all  entered  in  the  ledger  by  1.45  p.  m.  or  have  been 
paid  for  amounts,  stop-payments  et  cetera  by  that  time.* 

Transferred  Ledger  Pages 

Each  bookkeeper  is  provided  with  a  transfer  binder  for  those 
ledger  pages  which  have  been  entirely  filled  but  for  which 
acknowledgements  of  correctness  have  not  yet  been  received. 

Boxes  are  provided  in  which  certain  transferred  pages  are 
filed  vertically.  A  ledger  page  is  considered  "dead"  when  it  has 
been  entirely  filled  and  a  statement  covering  all  entries  has  been 
rendered  and  its  final  balance  on  the  ledger  page  has  been 
cross-checked  by  the  auditors  from  the  acknowledgment  of  cor- 
rectness. All  "dead"  pages  for  any  one  account  must  be  kept 
in  a  transfer  box,  but  no  page  for  any  one  account  in  the  box 
should  bear  a  date  later  than  that  of  any  page  for  the  same 
account  in  the  transfer  binder. 

Transferred  ledger  sheets  must  be  kept  in  alphabetical  order, 
the  sheet  for  the  newest  date  always  being  placed  in  front  of 
the  last  previous  sheet  for  the  same  account. 

Records  Temporarily  Taken  Away 

A  written  memorandum  must  be  left  in  place  of  any  record 
temporarily  taken  from  the  Bookkeeping  department,  this 
memorandum  to  show  by  whom  the  record  is  taken  and  to 
describe  the  record;  for  a  ledger  page,  the  last  previous  balance 
should  be  noted. 

Proof  of  Ledgers 

The  front  page  of  every  ledger  is  ruled  to  show  for  each 
day  of  one  month,  the  total  debits,  total  credits,  net  increase 
or  decrease,  net  balances,  total  overdrafts  and  total  credit 
balances.  These  figures  are  filled  in  each  afternoon  for  the 
current  day's  business. 

On  each  Tuesday  and  Friday  morning,  on  the  last  day  of 
each  month  and  on  the  last  night  of  each  month,  an  adding 
machine  list  of  the  balances  of  all  accounts  must  be  made  from 
the  ledger,  by  each  bookkeeper,  except  that  this  proof  may  be 
postponed  one  day  on  the  second  working  day  of  each  month. 
The  total  of  this  list  should  equal  the  total  credit  balances 
shown  on  the  proof  page  in  front  of  the  ledger.  If  these  amounts 
are  not  equal,  the  difference  should  be  found  and  corrected  as 
quickly  as  possible  without,  however,  neglecting  the  current 
work.  As  soon  as  the  ledger  is  in  balance,  the  proof  page  in 


*Time   for  reclamations  at   the   Clearing  House  banks  ends  at  2.30  p.   m.     (Saturdays 
I. oo  p.   m.) 


General  Instructions  to  Bookkeepers  105 

front  of  the  book  must  be  initialed  opposite  the  amount  which 
has  been  proved  to  be  correct.  The  initial  must  not  be  placed 
there  until  the  work  is  in  balance. 

New  bookkeepers  must  prove  their  ledgers  each  day  until 
specially  authorized  by  the  General  bookkeeper  to  reduce  the 
number  of  proofs. 

Differences  in  the  ledgers  not  discovered  by  1  p.  m.  each 
day  must  be  reported  to  the  General  bookkeeper  and  if  not 
discovered  by  the  following  morning  must  be  reported  to  the 
chief  clerk  before  12  o'clock  noon. 

It  is  suggested  that  each  ledger  be  divided  into  from  four 
to  six  sections  and  that  the  proof  of  the  ledgers  and  the  lists 
of  checks  and  deposits  be  segregated  into  the  same  sections, 
thereby  sub-dividing  the  work  of  looking  for  differences. 

Adding  Machines 

On  all  records  throughout  the  bank  except  bank  balance 
sheets,  the  following  adding  machine  rules  must  be  strictly 
followed: 

A  star  (*)  must  be  printed  at  the  beginning  of  each  and 
every  list. 

The  handle  of  the  adding  machine  must  never  be  moved 
while  the  carriage  of  the  machine  is  thrown  back.  Every  stroke 
of  the  machine  must  be  given  opportunity  to  show  on  the 
record,  whether  the  operation  is  one  of  clearing  the  machine, 
or  spacing,  of  subtracting  an  incorrect  amount,  of  subtotaling 
or  for  any  other  purpose. 

Each  item  listed  must  represent  one  individual  amount. 

When  an  incorrect  amount  has  been  listed  and  the  error 
is  immediately  discovered,  the  simplest  method  of  correction  is 
to  list  and  add  with  the  machine  the  complement  of  the  incor- 
rect amount  and  then  proceed  by  adding  the  correct  amount 
as  if  no  previous  entries  had  been  made. 

All  other  changes  must  be  made  with  pen  and  ink. 

In  altering  an  amount,  a  line  must  be  drawn  through  the 
original  figures  and  the  new  figures  placed  to  the  left  of  the 
column. 

Each  blotter  sheet  must  bear  the  signature  of  the  party 
writing  out  the  lists. 

Each  bookkeeper  should,  before  leaving  the  bank,  see  that 
the  adding  machine  nearest  his  desk  is  covered,  unless  it  is  then 
in  use. 

Inactive  Accounts 

Every  account  in  which  there  have  been  no  transactions  of 
any  kind  for  two  consecutive  calendar  months,  is  considered  an 
"inactive"  account.  When  two  accounts,  one  active  and  the 


106  Modern  Banking  Methods 

other  inactive,  have  similar  titles  which  are  in  danger  of  being 
confused  with  each  other  or  when  an  active  and  an  inactive 
account  are  carried  by  the  same  depositor  under  slightly  dif- 
ferent titles,  the  ledger  sheets  for  both  accounts  should  be 
carried  in  the  active  portion  of  the  ledger.  The  sheets  for  all 
other  inactive  accounts  must  be  transferred  not  later  than  the 
first  day  of  each  month  to  the  back  of  the  current  ledger  and 
filed  back  of  the  guide  "Inactive  Accounts",  alphabetically,  to- 
gether with  the  sheets  for  the  other  inactive  accounts.  The 
balances  must  first  be  listed  upon  one  ledger  page  directly  back 
of  the  "Inactive  Accounts"  guide  and  this  page  must  show  in 
detail  the  balances  of  all  accounts  carried  among  the  "Inactives". 
This  ledger  page  is  to  be  used  in  the  ledger  proof  as  if  it 
represented  one  depositor's  account.  It  is  headed  "Inactive 

Accounts  (bookkeeper's  subdivision)  " 

Inactive  ledger  pages  must  be  removed  to  the  active  division 
of  the  ledger  before  any  transactions  are  recorded  on  them. 

In  removing  an  inactive  ledger  page  to  the  active  division 
of  the  ledger,  enter  the  fact  of  its  removal  upon  the  ledger 
page  headed  "Inactive  Accounts....";  draw  a  line  through  the 
amount  on  the  inactive  list,  placing  the  date  of  withdrawal 
opposite  this  line;  then  place  the  same  date  in  the  ledger  date 
column;  write  the  name  of  the  account  in  the  memo  column 
and  the  amount  of  the  balance  in  the  total  check  column;  after 
this,  decrease  the  balance  of  "Inactive  Accounts"  an  amount 
equal  to  that  of  the  sheet  withdrawn. 

Checks 

The  Paying  tellers  are  responsible  for  the  genuineness  of 
the  signatures  of  all  checks.  For  all  other  points  the  book- 
keepers are  responsible.  Checks  paid  through  the  Clearing 
House  should  be  in  the  hands  of  the  bookkeepers  each  day  not 
later  than  1  p.  m.  (Saturdays  12:15).  All  checks  rejected  should 
be  handed  to  the  Interior  Proving  department  for  reclamation 
not  later  than  1:45  p.m.  (Saturdays  12:30).  The  only  Clearing 
House  checks  which  should  be  given  to  the  Interior  Proving 
department  for  reclamation  later  than  1:45  p.m.  are  those  which 
it  is  necessary  to  reject  in  order  to  protect  teller  checks.  All 
checks  received  by  1:30  p.m.  must  be  paid  by  2  p.  m.  Checks 
of  any  kind  received  by  the  bookkeepers  prior  to  1:30  p.  m., 
if  rejected,  must  be  rejected  not  later  than  2  p.  m. 

The  listing  of  balances  to  prove  the  ledgers  may  be  post- 
poned if  necessary  until  2  p.  m.  but  such  a  practice  is  undesir- 
able because  balances  cannot  be  changed  for  current  work  until 
the  proof  has  been  made. 


General  Instructions  to  Bookkeepers  107 

Overdrafts 

The  bookkeepers  are  held  strictly  accountable  for  all  over- 
drafts. No  check  may  be  paid  by  the  bookkeeper  unless  there 
are  sufficient  funds  in  the  account  to  cover  the  amount  of  the 
check.  Such  items,  if  paid  at  all,  must  bear  the  "O.K."  of  one 
of  the  officers,  of  one  of  the  Paying  tellers  or  of  the  chief  clerk. 

When  an  account  becomes  overdrawn,  the  mild  form  over- 
draft notice  is  to  be  forwarded  to  the  depositor  on  the  same 
day  that  the  overdraft  occurs;  if  the  overdraft  is  not  covered 
within  three  days,  the  strong  form  overdraft  notice  is  then  to 
be  forwarded,  except  in  the  case  of  out-of-town  depositors. 
Time  must  be  allowed  for  them  to  cover  before  the  second  notice 
is  forwarded.  A  memorandum  must  be  made  in  the  ledger, 
showing  the  date  of  each  notice. 

Signatures 

The  bookkeepers  must  not  charge  any  check  to  any  account 
without  specific  written  authority  unless  the  signature  to  the 
check  agrees  absolutely  with  the  name  under  which  the  account 
is  carried  on  the  books. 

Letter  of  Credit  Drafts 

Any  checks   which   bear  the  words   "For  account   of   Letter 

of  Credit  No ",  or  words  to  that  effect,  must  be  marked  by 

the  Exchange  department  before  being  debited  to  any  depositor's 
account. 

Amounts  to  Agree 

The  amount  written  in  the  body  of  each  check  and  the 
amount  expressed  in  figures  must  agree  with  each  other.  If  a 
protectograph  is  used,  this  amount  must  also  correspond.  Any 
variation  in  amounts  must  be  referred  to  the  Interior  Proving 
department. 

Date  of  Checks 

Checks  must  not  be  paid  if  post-dated,  that  is,  if  they  bear 
in  the  date  line  a  future  date. 

Checks  over  one  year  old  must  be  referred  to  the  Auditing 
department  and  initialed  by  the  auditor,  a  Paying  teller,  an 
officer  or  the  chief  clerk  before  being  paid. 

Stop-Payment 

Each  bookkeeper  is  provided  with  pennant  shaped  forms 
upon  which  to  record  requests  made  by  depositors  to  stop 
payment  on  various  checks.  Each  such  request  must  be  immedi- 
ately recorded  on  one  of  these  forms  and  the  form  ("stop- 
payment  flag")  inserted  in  the  current  ledger  directly  in  front 
of  the  drawer's  account,  where  it  will  remain  either  until  the 


108  Modern  Banking  Methods 

estoppel  is  removed  or  until  the  account  is  closed  or  until  the 
account  is  transferred  to  the  inactive  section  of  the  ledger.  In 
these  two  latter  cases  the  stop-payment  flag  must  be  trans- 
ferred with  the  ledger  page  and,  to  insure  permanency  of  the 
record,  stop-payment  stickers  showing  the  full  facts  must  be 
placed  upon  the  ledger  pages.  Checks  upon  which  payment  is 
stopped  must  not  under  any  circumstances  be  paid. 

Stop-payment  instructions  must  be  immediately  reported 
upon  by  the  bookkeeper  and  returned  to  the  Paying  teller.  They 
must  never  be  held  at  the  bookkeeper's  desk. 

Duplicate  Checks 

Checks  upon  which  the  word  "Duplicate"  has  been  written 
must  be  refused  by  the  bookkeepers  and  must  not  be  paid  at 
any  time  unless  payment  is  ordered  by  an  officer  of  the  bank. 

Checks  on  Other  Banks 

Care  must  be  taken  to  see  that  all  checks  paid  are  drawn 
against  the  depositors'  accounts  in  this  bank.  The  names  of  any 
firms  or  individuals  who  also  draw  on  other  banks  should  be 
reported  to  the  General  bookkeeper,  so  that  the  names  may  be 
placed  on  the  special  instructions  list. 

Endorsements 

Endorsements  of  all  checks  of  $100  or  over,  of  all  checks 
drawn  by  insurance  companies,  of  all  Certified  and  Cashier's 
Checks  and  of  all  voucher  checks  together  with  receipts  on  all 
voucher  checks  must  be  carefully  examined;  all  checks  which  are 
found  not  to  bear  correct  endorsements  must  be  refused  pay- 
ment. 

The  Clearing  House  stamp  guarantees  the  genuineness  of  all 
endorsements  but  does  not  guarantee  missing  endorsements.  To 
cover  this  point  the  following  rules  will  apply: 

1.  An  item  paid  to  an  individual  in  which  merely  the  initials 
are  given  must  bear  the  same  initials  but  no  harm  is  done  if  the 
Christian  name  for  which  an  initial  stands  is  used  in  the  endorse- 
ment.   If,  however,  the  payee's  Christian  name  is  given,  the  initials 
cannot  be  substituted  for  the  full  name. 

2.  In  the  case  of  checks  payable  to  "Mrs ":  if 

the    Christian   name   be   given,   there   is   no   necessity   for   "Mrs." 
appearing  on  the   back   of  the   check;   if,   however,   initials   or   a 
masculine  name  follow  the  word  "Mrs.",  the  "Mrs."  is  necessary 
in   order  to   show  that  the  item  has  actually  been   endorsed   by 
the  payee. 

3.  With  the  above  exceptions,  items  should  be  technically  cor- 
rect,  that  is,  the  words   on  the  reverse  side  of  the  checks   should 
agree  in  every  particular  with  those  on  the  face. 


General  Instructions  to  Bookkeepers  109 

Cash  to  Employees 

Checks  or  debits  must  not  be  cashed  by  employees,  except  at 
the  Paying  desk. 

No  checks  payable  to  the  bank  and  no  debits  may  be  cashed 
without  the  "O.K."  of  an  officer. 

Office  Debits 

Each  bookkeeper  will  be  held  personally  responsible  to  see  that 
every  office  debit  passing  through  his  hands  is  properly  signed. 

Every  debit  involving  the  payment  of  coin, 

Every  debit  to  individuals,  firms  or  corporations, 

Every  original  debit  to  Suspense  Account, 

Every  correcting  entry, 

must  be  signed  by  an  officer  of  the  bank.  All  correcting  entries 
must  also  bear  the  "O.K."  of  a  member  of  the  Auditing  department. 

Debits  to  Suspense  Account  covering  items  previously  credited 
Suspense  Account  by  the  Collection  department, 

Debits  to  banks  covering  amounts  credited  by  them  for  collections 
originating  in  the  Collection  department,  may  be  signed  by  the  Col- 
lection teller. 

Debits  to  banks  and  transit  exchange  covering  the  work  of  the 
In-Mail  and  Transit  departments  and  not  included  in  the  above  excep- 
tions, may  be  signed  by  the  Manager  of  the  Transit  and  In-Mail 
departments. 

Special  form  debits,  adjusting  errors  of  depositors  in  deposit  tags 
of  the  same  date,  may  be  signed  in  each  case  by  the  Receiving  teller 
with  whom  the  deposit  is  made. 

Checks  Rejected 

All  bookkeepers  must  keep  a  daily  record  of  all  checks  returned 
to  the  Interior  Proving  department  for  reclamation  or  for  switching 
to  another  bookkeeper.  This  record  must  consist  of  the  date  and 
amount  of  each  check,  together  with  the  name  of  the  drawer  and  of 
the  last  endorser,  and  should  be  written  on  the  reverse  side  of  the 
Daily  Check  Proof. 

After  a  check  has  been  rejected  for  insufficient  funds,  it  is 
sometimes  discovered  that,  owing  to  an  error  or  to  delay  in  handling 
the  deposit  tags,  the  ledger  did  not  at  the  time  the  check  was  re- 
jected show  the  real  facts  and  that  the  check  should  not  have  been 
rejected.  Bookkeepers  are  instructed  to  at  once  report  to  the  Gen- 
eral bookkeeper  the  facts  regarding  every  rejected  check  later 
found  to  be  in  funds.  The  General  bookkeeper  will,  whenever  de- 
sirable, take  the  necessary  steps  to  have  such  checks  again  pre- 
sented for  payment. 


110  Modern  Banking  Methods 

Cancellation  of  Checks 

All  checks  paid  must  be  cut  with  the  cancellation  stamp  by  the 
bookkeeper  through  whose  ledger  they  are  handled,  upon  the  date 
paid  but  not  until  all  checks  for  the  day  have  been  paid. 

Checks  must  not  be  paid  which  have  been  previously  cancelled. 

Responsibility 

The  statement  men  are  only  responsible  for  the  points  given 
under  the  above  paragraphs  headed,  "Signatures",  "Letter  of  Credit 
Drafts",  "Duplicate  Checks",  "Checks  on  Other  Banks",  "Cash  to 
Employees",  "Office  Debits"  and  "Cancellation  of  Checks". 

Duplicate  Checks 

All  requests  for  duplicate  checks  must  be  made  to  the  endorsers 
or  depositors  in  writing. 

Checks  to  Be  "Protected" 

and 
Dummy  Certified  Check  Debits 

A  carbon  copy  of  each  certified  check  debit  is  forwarded  by  the 
Paying  teller  direct  to  the  bookkeeper  immediately  upon  certification 
of  any  check.  This  debit  must  be  immediately  entered  in  the  ledger 
with  pen  and  ink,  together  with  the  letters  "c  c"  in  the  memo  column 
to  indicate  that  the  debit  represents  a  certified  check.  Checks  will 
not  be  at  any  time  certified  unless  the  drawer  has  sufficient  balance 
in  the  bank  to  cover.  Owing  to  a  deposit  not  having  yet  reached 
the  bookkeeper,  a  certified  debit  may  occasionally  appear  to  overdraw 
an  account.  In  such  cases,  the  debit,  after  being  entered  in  the 
ledger,  must  be  fastened  with  a  clip  to  the  ledger  page  over  the 
amount  of  the  last  balance,  so  that  in  reply  to  any  inquiry  as 
to  the  balance  there  will  be  no  danger  of  the  certified  check 
not  being  protected.  When  such  a  debit  does  not  appear  to 
overdraw  an  account,  the  new  balance  must  be  immediately 
entered  in  the  ledger. 

In  all  other  cases,  when  the  bookkeeper  receives  instructions 
to  protect  a  certain  amount  against  any  account,  the  slip  of 
instructions  must  be  fastened  directly  over  the  last  balance  but 
no  entries  made  in  the  ledger.  In  reply  to  subsequent  inquiries, 
information  will  be  given  as  follows: 

BALANCE  -      -      -      -  -    $ 

Less  check  to  be  protected      -      -  -    $ 

or 

Less  certified  check  to  be  protected  -    $ 

NET  BALANCE     -      -      -    $.. 


General  Instructions  to  Bookkeepers  111 

A.  M.  Deposits 

All  deposit  tags  received  at  the  Receiving  or  Collection  desks 
before  11  a.m.  (Saturdays  10.30)  must  have  on  them  the  words 
"A.  M.  Clearing".* 

Deposit  to  Own  Credit  to  Be  Questioned 

It  sometimes  happens  that  a  depositor  who  has  two  accounts 
with  us  draws  a  check  endeavoring  to  transfer  the  funds  from 
one  account  to  the  other  but  through  some  error  credits  the 
check  to  the  account  called  for  by  the  signature  line  of  the 
check.  To  avoid  errors  from  similar  occurrences,  the  following 
rule  is  effective :  in  every  case  where  a  deposit  is  made  consisting 
of  a  check  against  the  account  depositing  or  coin  and  such  a 
check,  the  heading  of  the  deposit  tag  must  be  initialed  by  the 
Receiving  teller,  the  auditor  or  the  chief  clerk. 

Date  Deposit  Tags 

Deposit  tags  are  sometimes  accepted  by  the  Receiving  tellers 
without  a  date.  Tellers  will  in  every  case  endeavor  to  watch 
this  and  see  that  all  tags  are  dated  but  any  tags  passing  the 
tellers  without  dates  must  be  dated  by  the  bookkeepers. 

Depositor's  Name 

The  bookkeeper  must  not  credit  any  deposit  to  any  account 
without  specific  written  authority  unless  the  heading  of  the 
deposit — or  credit — tag  agrees  absolutely  with  the  name  under 
which  the  account  is  carried  on  the  books. 

Check  Proof 

All  checks  are  charged  by  the  Interior  Proving  department 
direct  to  the  various  bookkeepers'  subdivisions.  Each  book- 
keeper must  list  his  checks  each  afternoon  on  a  Daily  Check 
Proof  sheet  and  balance  with  the  figures  of  the  Interior  Proving 
department.  Before  going  home,  he  must  initial  the  Interior 
Proving  department's  Final  Recapitulation  Sheet,  showing  that 
his  total  agrees  with  theirs. 

It  is  generally  found  advisable  to  list  all  checks  received 
before  2  p.m.  or  2:30  p.m.  and  prove  them,  so  that  at  the  close 
of  the  day's  business  there  will  remain  a  minimum  number  of 
checks  to  be  listed  and  proved. 

The  total  number  of  checks  paid  each  day  is  counted  by  the 
bookkeeper  by  use  of  this  proof-sheet  and  the  number  of  checks 
recorded  at  the  bottom  of  the  proof-sheet. 

Deposit  Proof 

All  deposits  are  charged  by  the  Interior  Proving  department 
direct  to  the  various  ledgers  in  the  same  manner  as  checks. 


*This  is  for  use  of  the  analysis  department. 


112  Modern  Banking  Methods 

Each  bookkeeper  must  list  his  deposits  each  day  on  his  Daily 
Deposit  Proof  sheet  and  balance  with  the  figures  of  the  Interior 
Proving  department.  Before  going  home  he  must  initial  the 
Interior  Proving  department's  Final  Deposit  Sheet,  showing 
that  his  total  agrees  with  theirs. 

Daily  Reports 

A  list  is  made  each  day  by  the  bookkeeper  showing  the 
name  of  each  new  or  re-opened  account  together  with  its  balance 
at  the  close  of  the  day's  business,  the  name  of  each  closed  ac- 
count with  the  previous  day's  balance  and  the  name  of  each 
overdrawn  account  with  the  amount  of  the  overdraft  and  the 
date  upon  which  the  account  became  overdrawn.  If  an  account 
became  overdrawn  during  the  current  day,  the  initials  of  the 
teller  or  officer  who  authorized  the  overdraft  are  to  be  sub- 
stituted for  the  date.  Each  Paying  teller  check  which  over- 
draws an  account  must  be  reported  with  the  name  of  the  Paying 
teller  who  actually  paid  the  check,  not  the  teller  who  finally 
initials  the  check. 

This  report  must  be  made  to  the  General  bookkeeper  as 
early  as  possible  each  afternoon  and  before  the  other  reports  are 
completed. 

Forms  are  to  be  filled  in  by  each  bookkeeper  each  afternoon, 
showing  the  names  and  amounts  (thousands  only)  of  all  accounts 
with  balances  of  $10,000  or  over  (the  minimum  for  bank  de- 
positors is  $50,000).  This  list  may  be  omitted  on  the  last  day 
of  each  month. 

Upon  this  same  form  are  listed  the  names  and  a  description 
of  the  transactions  for  each  and  every  account  the  balance  of 
which  increased  or  decreased  $5,000  or  more  since  the  previous 
day  (the  minimum  for  bank  depositors  is  $10,000).  If  all  the 
changes  are  correctly  reported,  the  net  amount  reported  by  one 
bookkeeper  (except  on  the  bank  subdivisions)  should,  as  a  rule, 
be  within  $20,000  of  the  day's  total  net  changes.  The  description 
must  explain  in  as  complete  a  manner  as  possible  every  large 
increase  or  decrease  in  deposits. 

As  an  aid  in  making  these  reports,  it  is  suggested  that  a 
pink  plug  be  placed  in  the  lower  portion  of  the  ledger  in  front 
of  the  page  for  each  account  to  be  reported. 

Under  the  heading  "Items  of  Interest",  on  these  forms,  the 
bookkeeper  should  use  his  ingenuity,  reporting  every  fact  coming 
to  his  attention  which  might  be  of  interest  to  the  officers.  En- 
dorsements indicating  that  a  depositor  is  depositing  in  another 
bank  or  that  he  is  spending  his  money  in  an  unusual  manner,  a 
sudden  increase  or  a  sudden  decrease  in  his  balance:  all  such 
facts  should  be  included  under  this  heading. 


General  Instructions  to  Bookkeepers  113 

Each  bookkeeper  must  each  day  fill  in  his  portion  of  the 
form  headed  "Bookkeepers'  Daily  Totals".*  Each  set  of  figures 
must  be  carefully  checked  by  another  bookkeeper  and  initialed,  to 
show  that  they  are  accurate. 

Inquiries  from  Tellers 

Requests  for  balances  or  for  information  regarding  the 
condition  of  depositors'  accounts  MUST  TAKE  PRECEDENCE 
ABSOLUTELY  OVER  ALL  OTHER  WORK  and  must  be  answered 
immediately. 

Requests  for  information  as  to  balances  must  be  replied  to 
in  writing  and  by  a  member  either  of  the  Bookkeeping  or  of  the 
Interior  Proving  department. 

Messengers  must  not  be  allowed  to  report  these  balances. 

Each  report  must  bear  an  initial  showing  by  whom  made. 
When  the  tellers  request  information  regarding  any  account  as 
to  the  balance  "now",  all  checks  and  deposits  which  the  book- 
keepers have  received  must  be  taken  into  consideration  and  also 
any  deposit  tags  which  may  be  in  the  possession  of  the  Interior 
Proving  department. 

Telephone  Inquiries 

No  information  as  to  whether  we  have  any  particular  ac- 
count, as  to  balances  or  as  to  any  transactions  may  be  given 
by  any  bookkeeper  over  the  telephone. 

Parties  making  inquiries  or  statements  as  to  differences  in 
the  accounts  must  be  connected  with  the  Auditing  department. 

Unprofitable  Accounts 

An  account  with  many  transactions  and  only  a  small  balance 
or  one  which  depends  upon  an  afternoon  deposit  of  Clearing 
House  checks  in  order  to  have  its  own  checks  in  funds  or  one 
depositing  large  out-of-town  checks  and  carrying  a  small  balance 
is  usually  unprofitable. 

A  memorandum  showing  the  facts  regarding  each  such  ac- 
count should  be  given  to  the  Analysis  department,  who  will 
take  steps  to  find  the  actual  earning  value  of  such  accounts  and 
to  bring  to  a  profitable  basis  any  which  are  being  handled  by 
us  at  a  loss. 

Special  Instructions 

Instructions  received  regarding  specific  accounts  must  be 
recorded  by  the  bookkeeper  in  the  ledgers  on  "Watch  this 
carefully"  stickers  placed  upon  the  stop-payment  flags.  Any 
instructions  received  from  any  other  source  than  the  General 
bookkeeper  must  be  reported  to  the  General  bookkeeper  the 
same  day,  for  confirmation  and  for  the  completion  of  his  records. 


"See   Page   97. 


114  Modern  Banking  Methods 

A  list  of  special  instructions  covering  the  names  in  his 
ledger  and  statement  subdivisions  must  be  kept  by  each  book- 
keeper. When  any  instructions  are  received  from  the  General 
bookkeeper  regarding  any  of  these  accounts,  they  must  be  posted 
to  this  list  and  to  the  ledger  not  later  than  the  following  day 
and  the  date  and  bookkeeper's  initial  placed  opposite  the  in- 
structions on  the  list. 

Accounts  with  Similar  Names 

For  all  accounts  with  similar  names  causing  danger  of 
confusion,  special  instructions  should  be  issued  to  prevent  contras. 
All  such  accounts  must  be  reported  by  the  bookkeepers  to  the 
General  bookkeeper  for  the  issuance  of  such  instructions. 

Accounts  of  Women 

The  name  of  every  woman's  account  carried  on  our  books 
must  carry  with  it  the  title  "Miss"  or  "Mrs.",  when  such  titles 
are  obtainable.  Any  new  accounts  without  this  information  are 
to  be  referred  to  the  chief  clerk. 

Poorly  Written  Figures 

When  the  amounts  on  checks  or  deposit  tags  are  illegibly 
written,  they  are  frequently  listed  differently  by  the  various  clerks 
handling  the  items.  The  amount  of  every  such  item  must  be 
marked  in  pencil  on  the  check  by  the  clerk  first  handling  it. 
Clerks  subsequently  receiving  the  item  will  be  guided  by  the 
pencil  figures  but  must,  of  course,  verify  their  figures  from  the 
body  of  the  check. 

Lunch  Hours  and  Conditions 

Before    leaving   for   lunch,    each    bookkeeper   is    expected    to 
arrange  in  alphabetical  order  all  of  his  checks  and  deposits   so 
far  received  and  which  have  not  yet  been  entered  in  the  ledger. 
In   order  that  inquiries   may  always   be   promptly  answered 
relative   to   various   accounts,   the   bookkeepers    are    divided    into 
four  groups: 
No.  i  Group, 

To  consist  of  bookkeepers  Nos.   1,  2,  3  and  5; 
No.  2  Group,  • 

To  consist  of  bookkeepers  Nos.  4,  6,  7  and  9; 
No.  3  Group, 

To  consist  of  bookkeepers  Nos.  8,  10,  11  and  12; 
No.  4  Group, 

To  consist  of  Bank  bookkeepers. 

At  least  one  of  the  bookkeepers  from  each  group  must  be 
at  all  times  at  his  desk  and,  in  the  absence  of  other  bookkeepers 
in  the  group,  must  promptly  answer  all  inquiries. 


General  Instructions  to  Bookkeepers  115 

Before  Leaving  at  Night 

Before  leaving  at  night,  the  current  day's  checks  and  deposit 
tags  must  be  arranged  in  alphabetical  order  and  given  into  the 
custody  of  the  bookkeeper  who  is  to  write  them  on  the  state- 
ments or  placed  for  him  on  the  proper  shelf  in  the  vault.  The 
ledgers,  statements,  checks  and  deposits  must  all  be  placed  in 
the  vault  and  the  desks  left  clear,  except  that  the  statement 
envelopes  and  the  new  statements  may  be  left  neatly  upon  the 
top  of  the  desks  during  the  last  week  of  the  month.  The  last 
man  on  the  bookkeeper's  floor  must  see  that  the  doors  of  the 
book-vault  are  closed  and  locked  and  that  all  adding  machines 
are  covered. 

Statements  of  Account 

The  first  work  in  the  morning  is  the  writing  up  of  the 
depositors'  statements.  Bookkeepers  must  not  under  any  circum- 
stances do  statement  work  for  accounts  which  they  have  just 
previously  written  in  the  ledger.  It  is  expected  that,  as  a 
result  of  the  statement  work,  any  errors  which  may  have  been 
made  the  previous  day  on  the  ledgers  will  be  discovered.  Entries 
on  the  statements  are  made  from  the  original  deposit  tags  and 
checks. 

Preliminary  to  writing  the  statements,  the  checks  are  taken 
to  an  adding  machine  and  lists  made  of  the  checks  of  each 
account  for  which  there  are  three  or  more  checks.  Office  debits 
must  not  be  included  in  these  lists. 

The  checks  and  deposits  are  then  listed  on  the  statements, 
a  separate  line  being  used  for  each  check  except  those  listed  on 
the  adding  machine;  for  these  the  adding  machine  totals  are 
recorded  together  with  a  statement  of  the  number  of  checks. 
The  number  of  checks  is  also  written  upon  each  list. 

The  dates  and  amounts  of  deposits  are  recorded  on  the  state- 
ments. Care  must  be  used  to  see  that  the  month  and  year  are 
properly  recorded  at  the  head  of  the  date  column  and  that  the 
balance  forward  is  dated. 

A  brief  description,  such  as  "ret."  for  an  item  returned, 
"int."  for  interest,  "x"  for  Transit  Exchange,  "coir  for  a  Col- 
lection desk  deposit,  etc.,  should  be  made  for  every  office  debit 
or  office  credit  except  the  regular  monthly  interest  debit. 

The  balance  for  each  account  in  which  there  have  been  any 
transactions  during  the  day  is  changed  and  the  new  balance 
placed  in  the  column  on  the  extreme  right  of  the  statement  form, 
opposite  the  printed  date. 

When  the  checks  and  deposits  have  been  written  on  the 
statements  and  the  balances  changed,  the  statement  men  call  to 
the  ledger  men  the  balances  for  all  accounts  in  which  there  have 


116  Modern  Banking  Methods 

been  transactions.  Discrepancies  are  at  once  investigated  and 
errors  corrected.  Changes  which  show  any  of  the  previous  after- 
noon's reports  to  be  incorrect  must  be  at  once  brought  to  the 
attention  of  the  General  bookkeeper.  It  is  expected  that  the 
bookkeepers  will  so  plan  their  work  that  the  calling  and  correct- 
ing of  the  statements  and  the  proving  of  their  ledgers  will  be 
completed  by  11  a.  m. 

Changes  on  the  statements  in  the  balance  column  must  be 
so  made  that  the  balance  as  it  finally  appears  will  be  opposite 
the  correct  date. 

Second  Day  of  Month 

When  the  work  for  the  first  day  of  the  month  has  been 
listed  on  the  statements,  all  balances  for  all  accounts  must  be 
called;  the  sheets  in  the  ledgers  and  in  the  statement  binders 
must  be  left  in  identical  order  each  with  the  other.  This  applies 
to  both  the  active  and  the  inactive  sections. 

"Balancing"  Statements 

To  close  out  a  statement,  copy  the  balance  from  the  last 
space  on  the  average  balance  stub  over  to  the  space  opposite 
the  word  "balance"  and  write  or  stamp  in  the  date. 

.  If    this    amount    is    incorrect    and    cannot    be    altered    neatly 
without  the  use  of  an  eraser,  the  statement  must  be  re-written. 

Every  statement  must  be  compared  with  the  ledger  (bank 
accounts  with  the  balance  sheet)  and  initialed  by  some  authorized 
employee  other  than  the  bookkeeper,  before  it  is  delivered  to 
the  depositor.  The  person  initialing  the  statement  will  at  the 
same  time  place  a  check  mark  with  pen  and  ink  or  with  in- 
delible pencil  opposite  the  balance  in  the  ledger. 

Statements  must  be  rendered  to  the  close  of  business  the  last 
day  of  each  month  for  every  account  in  which  any  change  has 
occurred  since  the  rendering  of  the  last  statement.  This  rule 
must  be  followed  in  absolutely  every  case. 

In  addition  to  this,  statements  must  be  promptly  closed  out 
and  sent  to  the  Statement  teller  whenever  requested. 

Statements  for  closed  accounts  must  be  made  up  through- 
out the  month  and  handed  to  the  General  bookkeeper  for  check- 
ing and  for  delivery  to  the  Auditing  department  not  later  than 
9  a.  m.  of  the  day  following  that  in  which  the  accounts  are 
closed. 

Mail  envelopes  should  be  used  for  the  enclosing  of  the  state- 
ments for  each  closed  account  except  when  an  additional  "end- 
on"  envelope  is  left  over  from  the  previous  month. 

On  the  end  of  the  month,  statements  for  closed  accounts 
or  for  accounts  with  overdrawn  balances  must  be  held  out  and 


General  Instructions  to  Bookkeepers  117 

given — not  to  the   Statement  teller,  but  to  the  Auditing  depart- 
ment. 

Any  statement  of  account  showing  an  overdraft  must  be 
referred  to  the  officers  before  being  delivered  to  the  depositor. 

Short-Footings 

Small  hard-lead  pencil  footings  of  the  deposits  and  of  the 
checks  on  all  statements  should  be  made  and  proved  at  least 
twice  each  month,  it  being  the  aim  to  have  all  checks  and  de- 
posits on  all  statements  short-footed  to  the  second  from  the  last 
day  of  the  month. 

Bookkeepers  leaving  for  vacation  or  relief  men  during 
vacation  periods  should  at  no  time  after  the  15th  of  the  month 
be  more  than  three  days  behind  the  current  day's  entries  in  their 
short-footing  of  statements. 

Cancelled  Checks 

The  checks  and  debits  must  all  be  counted  before  the  state- 
ments are  delivered  and-the  total  number  for  each  account  must 
agree  with  the  total  number  of  checks  and  debits  called  for  by 
the  statement.  Too  much  stress  cannot  be  laid  upon  the  necessity 
for  a  careful  proof  of  these  returned  vouchers,  as  it  is  highly 
important  that  every  check  be  given  back  to  the  right  depositor. 

Envelopes 

Envelopes  are  each  month  headed  by  addressograph  with 
the  depositors'  names,  for  use  of  the  bookkeepers.  Statements, 
vouchers  and  blank  acknowledgments  are  enclosed  in  these 
envelopes. 

Left  Over  Statements  and  Envelopes 

Statements  and  envelopes  unused  at  the  end  of  the  month 
must  be  placed  in  alphabetical  order  by  the  bookkeeper  and  given, 
for  future  use,  to  the  boy  in  charge  of  the  addressograph. 

Average  Balances 

Cards  are  provided  upon  which  must  be  recorded  each  month 
the  average  ledger  balances  of  all  depositors.  A  separate  card 
must  be  used  for  each  account. 

On  these  cards  there  are  columns  for  ten  consecutive  years; 
each  column  has  one  vertical  subdivision  to  the  left  of  which  are 
placed  the  thousands  and  to  the  right  of  which  are  placed  the 
hundreds  and  tens.  For  instance,  an  amount  written  down  as 
1,34  represents  an  average  balance  of  $1340. 

When  the  balance  of  an  account  averages  under  $500  for  the 
month,  a  rubber  stamp  which  states  "Under  $500"  may  be  used, 
unless  there  have  been  no  transactions,  in  which  case  the  actual 
average  will  be  reported,  $1  being  written  ",001",  $10  being  written 
",01"  and  $100  being  written  ",10". 


118  Modern  Banking  Methods 

To  figure  average  balances,  the  daily  balances  must  be 
carried  on  the  statement  stubs  opposite  the  correct  dates. 

The  balance  of  each  account  which  does  not  change  on  the 
first  day  of  any  month  must  be  carried  forward  to  the  stub.  This 
should  be  done  when  placing  on  the  statements  the  transactions 
for  the  first  of  the  month  but  may,  when  necessary,  be  omitted 
until  later. 

After  filling  in  totals  for  the  blank  dates,  the  balances  are  to 
be  short-footed,  including  the  dollar  column  but  omitting  the 
cents,  and  then  divided  by  the  number  of  days  in  the  month, 
28,  29,  30  or  31,  whichever  the  case  may  be. 

In  averaging  an  account  which  has  been  opened  only  a  por- 
tion of  the  month,  the  total  daily  balance  should  be  divided  by 
the  number  of  days  for  which  the  account  was  open. 

When  an  account  has  been  opened  and  closed  intermittently, 
the  balances  on  the  days  when  the  account  was  closed  should 
be  considered  as  zero  and  the  total  daily  balance  divided  by  the 
actual  number  of  days  in  the  month. 

Average  balance  stubs  may  be  thrown  away  after  they  have 
been  held  a  full  calendar  month.  Before  throwing  them  away, 
however,  the  name  must  be  torn  from  each  slip. 

New  Cards  and  Closed  Cards 

The  date  of  the  opening  of  each  account  must  be  placed  upon 
the  average  balance  card  when  the  account  is  opened. 

When  the  account  is  closed,  the  closing  date  must  be  placed 
upon  the  card. 

White  cards  for  closed  accounts  must  be  transferred  from 
the  active  file  when  the  records  are  closed;  but  the  blue  cards* 
are  to  be  left  in  the  active  file. 

The  old  cards  must  be  used  for  re-opened  accounts. 

Time  Limit  for  Average  Balances 

Average  balances  must  be  placed  upon  the  cards  not  later 
than  the  6th  day  of  each  month,  exclusive  of  Saturdays,  Sundays 
and  holidays. 

Averages  must  be  short-footed  each  month  up  to  the  20th 
of  the  month,  except  in  January. 

Yearly  averages  must  be  placed  upon  the  cards  not  later 
than  January  29th  of  each  year. 

Yearly  Averages 

In  figuring  averages  for  the  year,  when  an  account  sometimes 
has  a  balance  under  $500  and  sometimes  over  $500,  the  months 
stamped  "Under  $500"  will  be  figured  as  carrying  an  average 


*From   the   Credit   department. 


General  Instructions  to  Bookkeepers  119 

balance  of  $100  each  and  the  total  will  then  be  divided  by  12. 
Totals  for  new  accounts  will  be  divided  by  the  number  of 
months  open. 

End  of  the  Month 

During  the  last  few  days  of  the  month,  the  following  pre- 
liminary work  must  be  done  by  the  bookkeepers: 

1.  Short-foot    statements    (proving   short-footings)    to 
include  the  work  of  the  second  from  the  last  day  of  the 
month. 

2.  Short-foot  the  number  of  checks  on  the  statements 
wherever  the  number  is  not  obvious. 

3.  Remove   from   the  active   section  of  the   statement 
case  statements  for  all  accounts  which  have  not  changed 
during  the   month   except   those    few   accounts   in   which 
changes  are  expected;  these  unchanged  statements  are  to 
be  carried  in  front  of  the  statement  cases  in  alphabetical 
order. 

4.  Stamp    upon    all    the    remaining    active    statements 
the  closing  date. 

5.  Compare    the    envelopes    to    see    that    they    are    in 
identical     order    with     the     active     statements,    all     left- 
over  envelopes   to  be   carried   separately  in   alphabetical 
order. 

6.  See  that  the  envelopes  are  properly  dated  and  that 
auditor's  envelopes  and  dated  acknowledgments  of  cor- 
rectness  are   enclosed. 

7.  Count  carefully  all  checks,  leaving  them  in  alpha- 
betical order,  fastening  together  all  the  checks  for  each 
account  and  placing  the  number  of  checks  in  pencil  on 
the  back  of  the  last  check  of  each  bunch.     Prove  the  count, 
in  each  case,  of  all  checks  where  the  number  is  fifty  or 
more. 

8.  If  the  bookkeeper  desires,  he  may  place  the  checks 
in  the  envelopes  on  the  day  prior  to  the  last  day  of  the 
month  but,  in  so  doing,  he  must  carefully  prove  the  count 
of  checks  with  the  number  called  for  by  the  statement. 

First  of  Month 

On  the  first  of  each  month,  before  any  other  entries  are 
made  in  the  ledger,  every  ledger  page  in  the  active  section 
must  be  dated  on  the  first  unused  line  in  the  date  column, 
with  the  current  month  and  year.  This  date  must  be  placed 
upon  the  ledger  page  even  though  a  similar  date  was  placed  on 
the  last  previous  line  the  month  before  and  was  not  used 
owing  to  there  having  been  no  transactions. 


120  Modern  Banking  Methods 

On  the  first  of  each  month  also,  the  balances  for  the 
previous  day  are  to  be  carried  forward  from  the  average  balance 
slips  to  the  new  statements.  These  balances  must  not  be 
obtained  from  the  ledgers. 

See  also  "Inactive  Accounts"  first  paragraph.* 

Interest  to  Depositors 

In  figuring  interest,  the  period  considered  is  from  the  28th 
of  one  month  to  the  27th  of  the  following  month,  both  in- 
clusive. 

Not  later  than  the  20th  of  each  month,  interest  slips  must 
be  headed  and  the  balances  to  the  15th  filled  in. 

In  listing  the  daily  balances  on  the  adding  machine  upon 
an  interest  slip,  $10,160  should  be  written  as  "10.10"  and  other 
amounts  similarly  abbreviated.  Any  amount  under  $100  is 
ignored  on  the  interest  slips. 

Each  interest  slip  is  made  by  the  bookkeeper  on  whose 
ledger  the  account  is  carried  and,  for  all  except  bank  accounts, 
is  checked  by  the  statement-man,  who  must  make  for  each 
account  an  independent  set  of  figures,  using  his  statements  to 
obtain  the  total  gross  balances.  The  interest  slip  when  so 
checked  must  be  initialed  with  pen  and  ink  by  the  statement- 
man. 

Each  bank  bookkeeper  must  obtain  an  approximate  balance 
between  the  grand  total  of  the  depositors'  net  daily  balances 
as  shown  by  his  interest  slips  and  the  daily  totals  of  credit 
balances  for  the  same  period  as  shown  by  the  proof  page  in 
front  of  his  ledger.  The  totals  of  the  interest  slips  will  be 
smaller  by  about  $50  for  each  account  each  day.  Preliminary 
proofs  should  be  made  to  the  15th  and  to  the  25th  of  each 
month  and  a  final  proof  to  the  27th.  Interest  is  then  figured 
for  the  various  accounts  and  the  interest  amounts  totaled. 
Total  interest  so  obtained  must  balance  with  interest  on  the 
total  amount  of  the  interest  slips,  a  variation  of  one  cent  for 
each  account  being  permitted. 

Interest  on  $1  for  one  day  at  2%   per  annum  in  a  year  of 

365  days  is  $.0000548 

Interest  on  $1  for  one  day  at  2%  per  annum  in  a  year  of 

366  days  is  $.0000546. 

The  quickest  way  to  figure  interest  is  to  multiply  the  gross 
balances  for  one  day  by  this  fraction,  using  the  adding 
machine. 

When  the  interest  for  any  month  figures  less  than  $1  for 
a  depositor's  account,  interest  is  not  allowed  even  though  the 
name  of  the  account  be  on  the  list  of  depositors  to  whom 

*Page  106. 


General  Instructions  to  Bookkeepers  121 

interest  is  allowed.  Interest  bearing  accounts  with  balances 
under  $5000  must  be  referred  to  the  officers  before  interest  is 
allowed. 

Suggestions  for  Locating  Differences 

Provision  is.  made  frequently  throughout  the  bank  for  listing 
certain  items  twice,  the  items  being  arranged  in  different  order 
in  the  two  lists  and  being  listed  by  different  clerks  or  different 
departments.  Proof  of  the  correctness  of  the  listing  is  that 
the  totals  are  equal.  Totals  on  the  bookkeeper's  Daily  Check 
Proof  must  equal  totals  on  the  Interior  Proving  department's 
records.  Totals  on  the  Interior  Proving  department's  records 
must  equal  totals  on  the  tellers'  blotters.  Out-Clearing  checks 
and  Transit  Account  totals  must  equal  tellers'  totals.  The 
following  suggestions  are  made  for  locating  errors  which  cause 
differences  between  the  totals  of  these  lists: 

1.  Find    the    exact    amount    of    the    difference. 

2.  See    if   one    more -item   for   this    amount   has    been 
entered   on   one   list  than   on  the   other. 

3.  The    bulk    of    the    items    on    all    records    are    listed 
by   use    of   the    adding   machine.     Changes   are    made   in 
ink.     Test   the   changes   to   see   if  they  have   been   made 
correctly. 

4.  If   the   amount   of  the   difference   is   divisible   by  2, 
see   if   half  the   amount   has,   through   error,   been   added 
to  one  of  the  lists  when  it  should  have  been  subtracted 
or  subtracted  from  the  other  when  it  should  have  been 
added. 

5.  Find  whether  the  difference  may  have  been  caused 
by   transposition   of    the    digits    in   the   amount   of   some 
check.     To   do   this,   add  the   digits   of  the   difference   to 
find     whether     the     total     is     divisible     by     9.*1     If     the 
sum  of  the  digits  is  divisible  by  9,  then  the  amount  itself 
is  divisible  by  9  and  the  difference  may  have  been  caused 
by  a   transposition. 

To  find  what  amounts  may  have  been  transposed, 
divide  the  amount  of  the  difference  by  9  and  then  add 
the  quotient  to  the  amount  of  the  difference.*2  The 
digits  of  the  amount  so  produced  may  have  been  trans- 
posed to  cause  the  difference.*3  Look  for  this 


#1For    a    difference    of    157-05,    the    sum    of    the    digits    is    18,    which    is    divisible    by 

9;   (1+5+7+0+5=18). 
*2     157.05-1-9=:   17.45;     17.45+   157.05=:   174.50 

360       -=-9=:   40       ;      40       +   360       =:   400 
3960      ^9  =  440       ;  440      +3960      =4400 
*8     174.50  listed  as     17.45  would  cause  a  difference  of     157.05 

400          "         "     40  "  "       "         "  "     360 

f  4400          "         "  440  "       "         "  "  3960 

\  4000          "         "  040  "  "       "         "  "  3960 


122  Modern  Banking  Methods 

amount  in  one  list  and  see  if  it  has  been  transposed  in 
the  other.  If  the  apparently  transposed  amount  has  only 
one  digit  other  than  "0,"  the  one  digit  may  have  been 
transposed  with  "0"  or  may  be  the  amount  of  variation 
between  two  other  digits  which  have  been  transposed.** 
The  digits  in  all  columns  other  than  the  two 
affected  must  be  ignored.*5  Look  for  such  a  varia- 
tion between  figures  in  the  two  columns. 

6.  Classify  and  divide  the  items  on  the  two  lists  and 
relist  them  on  the  adding  machine  in  these  new  divisions 
instead  of  checking  the  amounts  item  by  item  from  list 
to  list.  For  instance,  if  the  difference  is  lc.,  relist  all 
the  items  ending  in  lc.,  then,  if  necessary,  all  ending  in 
3c.,  then  all  ending  in  7c.,  then  all  ending  in  9c.  and, 
finally,  all  ending  in  5c.  (or  all  ending  in  4c.  and  in 
6c.).  If  any  item  in  either  list  which  should  end  in 
Oc.  or  in  2c.  has  been  listed  as  ending  in  lc.  or  if  any 
item  which  should  end  in  lc.  has  been  incorrectly  listed, 
the  error  should  be  located  by  listing  those  items  which 
end  in  lc.  The  difference  between  the  totals  of  the  two 
lists  will  be  the  amount  of  the  incorrectly  listed  item, 
not  lc.  Judgment  must  be  used  in  classifying  the  items 
to  be  re-listed.  Suggested  classifications  are:  all  over 
$1000,  all  between  $500  and  $999.99,  all  between  $100  and 
$499.99,  all  between  $50  and  $99.99,  all  between  $10  and 
$49.99  and  all  under  $10;  or:  all  with  1,  all  with  3,  all 
with  7,  all  with  9,  all  with  4  and  all  with  6  in  certain 
columns.  Other  combinations  may,  at  times,  be 
preferable. 


**A  difference  of  $360  would  appear  to  represent  a  transposition  in  the  digits  of 
$400  to  read  $40.  Looking  for  a  variation  of  4  between  digits  in  the  $100  column 
and  in  the  $10  column,  the  difference  may  be  found  to  have  been  caused  by 
a  transposition  between  the  amounts  40  and  400  or  150  and  510  or 
260  and  620  or  370  and  730  or  480  and  840  or  590  and  950.  The  difference 
between  the  digits  for  any  one  of  these  amounts  is  4.  The  same  rule  would 
apply  for  a  difference  of  $3960,  apparently  caused  by  a  transposition  in  the 
digits  of  4000  and  40;  the  variation  of  4  must  be  between  the  digits  in  the 
$1000  column  and  the  $10  column. 

**The  $3960  difference  is  caused  as  readily  by  a  transposition  of  the  digits  in 
the  amounts  3175  and  7135  as  in  the  simpler  amounts  3070  and  7030. 


The  Hicks- Judd  Co..  Printers,  51-65  First  St.,  San  Francisco,  Cal. 


UNIVERSITY  OP  CALIFORNIA  LIBRARY 


